The internals of the stock market looks horrible, and I think that any rally at this point in time is an opportunity to short yet again.
The S&P 500 initially fell on Tuesday only to find buyers underneath and recover. By doing so, it looks like the market is trying to figure out what to do heading into the Federal Reserve meeting, which will cause a lot of noise. There are plenty of other reasons than just the Fed to think about shorting rallies.
The lack of growth that we are going to be seeing in the United States and beyond will certainly have an effect on the S&P 500, as it looks like the world is ready to go into some type of recession. Furthermore, we have a lot of concerns when it comes to Ukraine and a whole host of other things like sanctions on multiple countries. Speaking of multiple countries, there are plenty of countries around the world that are now starting to ban exports of food, so nothing looks good at the moment.
At this point, if we get through Wednesday and the Federal Reserve sounds a bit more dovish than anticipated, I would anticipate that the S&P 500 will probably rally. However, that rally will more than likely be sold into, because of all of the other issues. This is not just the traders on Wall Street throwing a tantrum because of a lack of cheap and easy money; this has become something a bit more drastic at this point. The internals of the stock market looks horrible, and I think that any rally at this point in time is an opportunity to short yet again.
The 4100 level has obviously been a significant support level, but whether or not it holds is a completely different question. We are also getting ready to form the so-called “death cross”, but it should be noted that the indicator is almost always late, so I do not read too much into it, but some people do. We need to at the very least get above the 200-day EMA on a daily close to think about going long, something that we are nowhere near doing at the moment. If the Federal Reserve suddenly chooses not the get tight with its monetary policy at all, we may possibly have a move like that, but right now I just do not see that happening because of all of the inflation that they are going to have to deal with.