The S&P 500 Index has been trading in choppy action over the last month. The index is giving mixed signals. You can see on the daily chart below how the trading action is making a rounding top. It is suggesting the markets are tired short-term and are showing signs of weakness.
The horizontal blue line represents a strong level of support for the S&P 500. This is an important line in the sand for the S&P 500 Index.
What does all this mean for investors? One of two things will happen. 1. The S&P 500 index finds support at the 2400 level, possibly trades sideways building strength before moving higher. 2. The S&P 500 breaks below the 2400 level and starts to move lower into the summer.
When we take a deep breath of air, our lungs can only hold it so long before we must exhale. The same is true with the stock market. Since the elections, the markets have taken a deep breath and the markets need to exhale.