Day traders have been treated to speculative power in the S&P 500 the past month, but the last couple of days are highlighted via the strength that can suddenly emerge. The S&P 500 is near 6,660.00 early this morning.
After seeing fast selling emerge yesterday as the U.S Fed’s FOMC rate decision and statement shook financial markets, the S&P 500 finds itself back with record heights early this morning in futures trading. The S&P 500 fell abruptly and with force yesterday touching the 6,560.00 vicinity, but then reignited higher as financial institutions and large players reacted to Jerome Powell’s interest rate cut rhetoric with buying.
As of this writing the S&P 500 is back within record heights and traversing near the 6,660.00 realm. That is a one hundred point difference after yesterday’s spike downwards. This should highlight for day traders the danger of speculating in the S&P 500 blindly. Too much leverage in the index can lead to massive gains if a trader is on the correct side of a surge, but can also lead to the poor house if things go badly.
Behavioral Sentiment and the Search for More Highs
Looking for additional upside in the S&P 500 seems logical. The trend upwards has been powerful since April of this year. Yes, there have certainly been reversals lower, so patience is needed and traders should not get overly greedy. However, if a speculator can practice control by using take profits and solid risk management, trying to ride the trend upwards cannot be disagreed with at this time.
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However, yesterday’s spike lower was not a one-off event. Dangers including fast reversals downward are real. Behavioral sentiment controls the S&P 500 and this is not going to change. Upside may be argued to be fundamentally sound, but raw emotional buying by large financial institutions is fueling the powerful move to new heights. Fear when generated, like yesterday can cause massive losses for day traders caught in sudden storms. Quick hitting wagers in the S&P 500 by traders with limited funds is one way of not allowing profits to vanish, but this is also not easy and persistent focus is needed.
Near-Term Wagers in the S&P for Speculators
Early morning upside generated today is attractive, but it is also suspicious after the massive moves yesterday which showed financial institutions remain jittery.
- Interest rates were cut yesterday and another one is likely in October, this may help U.S Treasury yields decrease, but it has to also be considered the rate cut yesterday and the confirmation of another cut in October were expected.
- This may set the table for some headwinds in the S&P 500 short and near-term.
- Buying action early this morning will be met with interested glances from U.S financial houses in the coming hours, and day traders should brace for possible reactions which might cause temporary choppiness.
- Record highs have certainly been attained and the bull market is strong, but traders need to stay realistic regarding their bets.
S&P 500 Short-Term Outlook:
Current Resistance: 6,670.00
Current Support: 6,649.00
High Target: 6,700.00
Low Target: 6,595.00
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