S&P 500 Price Forecast – Martin Luther King Day Dampens Volume

The S&P 500 has gapped lower to kick off the week only to turn right back around to fill that gap. All things being equal, the Martin Luther King Junior holiday of course will keep a major amount of liquidity out of the markets and therefore lack of volume keeps the candlestick from being anything that I would consider to be too important. To the downside, I believe that the 3700 level would also be supportive, right along with the 50 day EMA and the uptrend line. Remember, the S&P 500 rallied just mainly based upon liquidity more than anything else, even though it does get the occasional pullback. Wall Street has been trained to understand that the Federal Reserve will step in and bail out Wall Street.

S&P 500 Video 19.01.21

To the upside, I believe that the 4000 level would be the initial target based upon the breakout from the previous consolidation between 3200 and 3600. The 400 points extrapolates for a move to the 4000 handle. I do believe the 4000 will be very difficult to break above, as it is a large, round, psychologically significant figure and of course an area that I think will cause a bit of profit-taking.

Nonetheless, I think that a lot of the pundits out there just assume we are going there so it will become more or less a “self-fulfilling prophecy”, and that in and of itself could be a main driver. Regardless, I think there are far too many technical reasons underneath to think that this market goes higher and keeps me from selling. Beyond that, it is earnings season but there always seems to be a narrative to look beyond it.

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