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S&P 500 Forecast: Volatility Through End-of-Month Rebalancing


The S&P 500 has been all over the place during the trading session on Thursday, as it was the end of the month and of course, rebalancing occurs. That being said, it really doesn’t change anything from a fundamental standpoint other than cause people headaches. If you were trading the index during the trading session on Thursday, you’ll most certainly get chopped up during the day, because the swings were pretty wild. The NASDAQ 100 was even worse as per usual.


That being said, it looks like we may be due for a short-term bounce. Short-term bounce should be a nice selling opportunity yet again, because the market is in such a bearish place, and there’s really nothing to suggest that the economy is going to turn around. The 4000 level has the 50 Day EMA sitting at it, but I think there’s a lot of resistance at the 3950 level as well. I’m looking for some type of recovery here, so that I can start selling again as the trend is so firmly ensconced in the market.

The Federal Reserve is going to tighten until something breaks, and that something might just well be the S&P 500. Truthfully, it’s probably going to be found in the credit markets, but that’s not something most retail traders have access to. If we break down below the bottom of the candlestick for the trading session on Thursday, then we will almost certainly go looking toward the bottom again. I don’t like stocks, regardless of what country they come from. All indices look very bearish to me at the moment, because even with the Bank of Japan loosening its monetary policy, even the Nikkei 225 is struggling to gain.

This is the first time a lot of traders have dealt with a tightening cycle, and most certainly the first time 95% of them have had to deal with inflation. This is part of the problem right now because so many people have no idea what to do with themselves. We will continue to see volatility and choppy behavior going forward, which generally leads to lower pricing over the longer term. After all, investors don’t like shaky markets, so that does take a lot of money out of the equation.

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