Pulls Back from 200-Day EMA

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So far, everybody on the Federal Reserve Board continues to reiterate the idea of a tight monetary policy going forward, so I just don’t see why the market is trying to front-run something that’s not going to happen.

The S&P 500 pulled back from the 200-Day EMA during the trading session on Monday, as well as the 4000 level.
There is a lot of noise in this area, so I suspect that we are probably going to see a little bit of a pullback.
Whether or not this was the top of the short-term rally is a completely different question, but it should be noted that there is a huge options barrier in that area that people will be paying close attention to. It is because of this that I think it’s more likely than not we get a pullback in the short term.

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Stock markets are crashing again

Look at this chart, we could very well drop down to the 50-Day EMA, which of course has been important more than once. The 3800 level sits underneath there as well, and therefore I think we could see a little bit of support in that area. If we were to break down below there, then it’s possible that we had back into that previous consolidation area that I have marked on the chart. We pull back from the 200-Day EMA, which attracts a lot of attention in and of itself from an algorithmic standpoint.

Stocks Likely to Keep Losing Ground

On the other hand, if we do break above the 200-Day EMA, then it’s possible that we could go looking to the 4200 level. The 4200 level is followed by the 4300 level, but I have a hard time believing that we are going to get to that area without the Federal Reserve truly stepping back. So far, everybody on the Federal Reserve Board continues to reiterate the idea of a tight monetary policy going forward, so I just don’t see why the market is trying to front-run something that’s not going to happen.

Nonetheless, that’s exactly what has been happening, but another potential issue is out there, with contagion coming out of the crypto markets. More and more firms are learning that they have lost a ton of money in the FTX Ponzi scheme. Keep in mind that they will have to sell things that they own in order to cover some of the losses that they will never get their hands on again. Because of this, we may see selling in some of the most random places that you would think have very little to do it crypto.