- The month of April we have seen a significant turnaround and the S&P 500, after most pundits thought that the S&P 500 might go all the way down to zero, at least the way they were behaving.
- It’s worth noting that the market has bounced directly from the 4800 level, an area that’s been important in the past.
- It also features the 200 Week EMA, and therefore I think you’ve got a situation where we continue to see a lot of noisy behavior, but I think ultimately the bounce tells us that the stock market isn’t necessarily going to head into the Great Depression.
While I do believe that the stock market could very well drop pretty significantly at one point or another during the month of May, I don’t necessarily think that we will fall apart. Keep in mind that the volatility is a feature of the current news flow, which is focusing on tariffs and global trade. After all, if global trade in tariffs continue to be a major issue, people will have no idea what the price companies on, as they don’t know what the tariff effect will be on a lot of these companies, and people start trying to raise cash in order to stay safe in volatile times.
Major Point of Inflection
The area between the 5600 level and the 5800 level is a major point of inflection, and I think at this point in time the market is likely to continue to see a lot of noisy behavior, but if we can break through all of that, I think it opens up the possibility of a move to the 6100 level given enough time. I do think that any pullback at this point in time probably sees a lot of support at the 5400 level, the 5200 level, and then the 5000 level.
I do believe that May could end up being very noisy, but I also think that the current rally suggest that we are not going to fall apart and start dropping significantly. In general, this is a market that I think continues to see a lot of stability being forced into the market until of course we get the next tariff panic.
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