Signs of weakness will almost certainly be jumped on, allowing the traders out there to short this market yet again.
The 3900 level is a large, round, psychologically significant figure, which is also an area where we had seen resistance previously. At this point, the market had struggled to be bullish, but we did shoot above that level over the last couple of weeks. Now we have pulled back to reach the previous breakout, now we have a lot to think about in this area.
The market now looks as if it is trying to figure out whether or not it can go higher, but at this point, it’s likely that we will see a lot of interest in this market one way or the other. If the Federal Reserve sounds like it’s going to remain very tight and perhaps even increase the pressure on monetary policy, the S&P 500 will almost certainly drive to reach the 3800 level. The market will continue to be very noisy, but I think a lot of this will come down to the way the market reacts to not necessarily the rate hike itself, but the statement afterward.
If we turn around a break above the 5000 level, it’s likely that the market could go reaching toward the 4200 level. That’s an area where we have seen a lot of action previously, so I look at that as an area that will be difficult to break above unless the Federal Reserve changes its attitude. That could send this market soaring, but that is very unlikely to be the case at this announcement. Ultimately, this is a market that will be volatile, but I think we probably still have a long way to go before we can change the overall trend. Signs of weakness will almost certainly be jumped on, allowing the traders out there to short this market yet again.