- The month of April we have seen a significant turnaround and the S&P 500, after most pundits thought that the S&P 500 might go all the way down to zero, at least the way they were behaving.
- It’s worth noting that the market has bounced directly from the 4800 level, an area that’s been important in the past.
- It also features the 200 Week EMA, and therefore I think you’ve got a situation where we continue to see a lot of noisy behavior, but I think ultimately the bounce tells us that the stock market isn’t necessarily going to head into the Great Depression.
While I do believe that the stock market could very well drop pretty significantly at one point or another during the month of May, I don’t necessarily think that we will fall apart. Keep in mind that the volatility is a feature of the current news flow, which is focusing on tariffs and global trade. After all, if global trade in tariffs continue to be a major issue, people will have no idea what the price companies on, as they don’t know what the tariff effect will be on a lot of these companies, and people start trying to raise cash in order to stay safe in volatile times.
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Major Point of Inflection
The area between the 5600 level and the 5800 level is a major point of inflection, and I think at this point in time the market is likely to continue to see a lot of noisy behavior, but if we can break through all of that, I think it opens up the possibility of a move to the 6100 level given enough time. I do think that any pullback at this point in time probably sees a lot of support at the 5400 level, the 5200 level, and then the 5000 level.
I do believe that May could end up being very noisy, but I also think that the current rally suggest that we are not going to fall apart and start dropping significantly. In general, this is a market that I think continues to see a lot of stability being forced into the market until of course we get the next tariff panic.
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