FXEmpire | April 6 2013 12:59 EDT
The S&P 500 index had a fairly negative week over the last five sessions, but found support at the 1540 level, an area that many of the bullish traders out there would’ve thought important. Because of this, it appears that the market will hold up after all, and of course well above the vital 1500 level. This may be predicated mainly upon the idea that the Federal Reserve will continue to keep its loose monetary policy intact for much longer than anticipated.
More calls for that would have come into play on Friday, as the jobs number came out much lower than anticipated. Because of this, we think that this market will continue to find a bit of support and that dips will continue to be bought, even though it is getting a bit overextended at this point. Pullbacks will be buying opportunities, and we will continue to look at the S&P 500 futures market for that particular type of trade.
We are entering earnings season this week, so a lot of headlines will be crossing. However, it looks like the Federal Reserve is the only game in town, and they are throwing money at traders in order to invest it. Or, and other words they are simply killing the bond market to make sure that the only chance of yield that firms have are in the stock markets. That being the case, we fully expect to see the S&P 500 continue to grind much higher.
We think the financials will have a decent chance of doing well, but in general the best play will probably be the SPY ETF, or visible futures market. Simply because of the fact that it is a broad-based rally, and a lot of funds simply have no choice but to go long of this market based upon the performance that we’ve seen so far. The last thing a professional money manager wants right now is to be underperforming the market, which is performed quite spectacularly. It’s a lot of pressure, but we are positive that there are managers out there willing to throw money at the market just to stay afloat right now, and with the bond market simply not offering any type of yield, money flowing into the stock market is almost inevitable.
Click here to read S&P 500 Technical Analysis.
Originally posted here