S&P 500 Attempts to Recover

The S&P 500 has gapped lower to kick off the trading session on Wednesday, but then turned around to show signs of life as we are awaiting the FOMC meeting minutes, statement, and of course the press conference. At this point, the question is not so much whether or not the Federal Reserve is going to tighten, but whether or not they are going to mention that they are monitoring the stock market. After all, we have an entire generation of traders who have been raised on the idea of the “Fed put”, meaning that they will jump in to save Wall Street every time it starts losing money. If that ends up not being the way forward, Wall Street is going to have to stand on its own, which means probably much lower valuations for most stocks.

S&P 500 Video 27.01.22

Rallies at this point in time are probably somewhat limited, because we have a lot of issues beyond the Federal Reserve. The 4500 level should be resistance, as it was support previously. All things being equal, this is a market that I think you are simply looking for an opportunity to short yet again. If we turn around a break down below the bottom of the range over the last couple of days after Jerome Powell speaks, then the market goes below the 4200 level and much lower. It will be interesting to see what happens next, but we are bit oversold so a little bit of a bounce makes sense, but that should give you an opportunity to start shorting the market over the next several weeks as volatility should continue to be an issue.

For a look at all of today’s economic events, check out our economic calendar.