Yesterday started with a flourish for the S&P 500 as it jumped upwards upon opening and soon hit a high of nearly 6,429.00, this before selling off slightly and touching the 6,380.00 vicinity. The profit taking was then met by more buying and the S&P 500 was testing the 6,400.00 mark again. Monday’s buying surge was helped by weekend news about the trade agreement between the U.S and Europe.
Day traders tempted to pursue the S&P 500 higher cannot be blamed, but they need a full arsenal of risk management and a conservative approach. The ability of the index to touch the 6,429.00 area yesterday was remarkable and this morning’s future trading has kept the S&P 500 above 6,400.00. Traders waiting for U.S investors to enter the markets today may find that they miss out on early opportunities as wagering remains optimistic and important psychological levels prove attractive technically.
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6,400.00 as a New Height and Prospects
The 6,400.00 should be watched by traders as resistance today, this as financial institutions pursue their positions. Headwinds could certainly cause a bit of a shake out, this as the Federal Reserve is anticipated to deliver its FOMC pronouncements tomorrow. Interest rates in the U.S are important, but it appears financial institutions have likely braced for the mantra from the Fed of ‘uncertainty’ to be heard. Yet, large players continue to show they are willing to be buyers.
Speculators should not dismiss the trend upwards. Yes, the S&P 500 may see reversals lower that become sticky, but the upwards momentum in the index clearly shows optimism is outweighing concerns. The S&P 500 is within record territory and yesterday’s heights could be challenged in the short and near-term with additional buying impetus which may not be too hard to find. Day traders need solid risk taking tactics because intraday choppiness is guaranteed, handling the ups and downs of the marketplace is an important aspect of day trading, conservative leverage is needed to battle volatility.
Near-Term Betting on the S&P 500
Traders need to remain realistic regarding their targets. If a trader wants to be a buyer and has limited funds, aiming for numerical levels that are below technical highs may be a solid tactic. In other words if resistance is thought to be a certain ratio above because technically that is where reversals appear to be occurring, setting a target below that level as a take profit mark may prove useful.
- Big players can afford to wait on the S&P 500 to make major moves and achieve record heights.
- Smaller day traders need to accept that they should cash out profits quickly and not allow positive results to slip away.
- The S&P 500 continues to look positive, but traders need to keep in mind tomorrow’s Fed interest rate rhetoric, because it will cause volatility.
S&P 500 Short-Term Outlook:
Current Resistance: 6,411.00
Current Support: 6,401.00
High Target: 6,445.00
Low Target: 6,390.00