- The S&P 500 was extraordinarily strong during the trading session on Friday as Jerome Powell gave his speech at Jackson Hole.
- By having a bit more of a dovish tone and finally admitting that the Federal Reserve is “open to cutting rates”, this gave stock traders hope, and with that being the case, the 6500 level above will continue to offer a significant barrier.
- If we can get above there, then it’s likely that we will kick off the next leg to the upside.
However, keep in mind that the Federal Reserve has seen some issues and the economy could be a sign of weakness, and that can eventually come back to bite you. The size of the candlestick is obviously very important, but I would also point out that we are still in the midst of summer trading, meaning that volume isn’t quite where it typically would be. With this, I think we have a situation where shorter-term traders will probably come in and determine where we go next.
Are They Buying the Dips Going Forward?
The question at this point in time is whether or not they are buying dips going forward, because it will dictate whether or not there is still plenty of firmness to this uptrend. The candlestick has engulfed the previous 3 or 4 sessions, suggesting that there is real momentum behind this candlestick, but we do need to keep an eye on that 6500 level, because there will be a ton of options with strike prices there, and of course a certain amount of psychology attached to it.
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The 50 Day EMA is all the way down at the 6269 level but is rising quite nicely. This is why I feel that any pullback that we get will more likely than not eventually attract a certain amount of buying pressure, and it is probably worth noting that some of the last loved indices such as the Dow Jones Industrial Average and Russell 2000 have started to join the party as well, so there is a bit of rotation going on that could cause fluctuations.
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