The S&P 500 was relatively quiet during the trading session on Tuesday as the 3700 level seems to be a bit of a magnet. That being said though, I think that will more than anything else we are looking at the possibility of the Senate runoff election in Georgia causing volatility and I think it makes quite a bit of sense that the markets are simply waiting to see what happens next. The results of the election could have massive ramifications on monetary policy as well as government policy in general, so it makes quite a bit of sense that we will see a bit of stagnation during the day.
S&P 500 Video 06.01.21
The uptrend line underneath should continue to offer support, just as the 3600 level and the 50 day EMA sitting just above there should. All things being equal, this is a market that should continue to go looking towards the 3800 level. Based upon the previous consolidation area of 400 points, that would extrapolate for a move to the 4000 level, which is also a large, round, psychologically significant figure as well.
The S&P 500 is obviously very tied to risk appetite, so as long as the Democrats do not end up sweeping the Senate as well, then it is likely that the S&P 500 will continue the overall move higher. Stimulus is coming regardless, so that should continue to press the markets higher over the longer term. I have no interest in shorting this market, at least not in the current environment that we have seen.
For a look at all of today’s economic events, check out our economic calendar.