S&P 500 Weekly Price Forecast – Stock Markets Pull Back From Highs

The S&P 500 is a bit negative for the week, as traders had initially been enthusiastic about the idea of stimulus overall. After all, the stimulus package may not be the $1.9 trillion that Joe Biden asks or, and therefore people are starting to reprice all of that “cheap money.” Wall Street runs on cheap money, and that of course has a huge influence on stocks. We are getting a little bit overstretched at this point in time, and therefore a pullback makes quite a bit of sense. I do not expect a major trend change, rather I think that it offers a bit of a value play for those who are looking to pick up stocks “on the cheap.”

S&P 500 Video 18.01.21

If we can break below the bottom of the trend line, the market would more than likely drop down towards the 3600 level. That is an area that previously had been resistance, so now it should certainly offer quite a bit of support. The 3800 level has offered significant resistance, but if we can break above there then it is likely we could go to the 4000 handle. When you look at the previous consolidation area, it measures for a 400 point range. By breaking above 3600, that signifies that we could go as high as 4000. I do not necessarily think that we get there easily, but this is a market that has been resilient over the longer term. Stimulus is the key, and the fact that we are in the midst of earnings season will probably just add a bit of volatility to the equation.

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