The S&P 500 traders continued the FOMO trade overnight, but once the cash market opened things settled down again. It is almost as if Wall Street is starting to take notice that the world has a lot of issues at the moment. As things get increasingly volatile both from a social and economic standpoint, Wall Street has simply pumped stocks higher and higher. However, you should keep in mind that these indices are very misleading and the fact that they are not equal weighted. In other words, a handful of stocks can send this market straight up in the air, and a lot of traders will refer to the S&P 500 as the “S&P 6”, because there are six stocks that make up a majority of what happens.
S&P 500 Video 03.06.20
It is a good sign that the S&P 500 is holding above the 3000 level, but it should also be noted that there is a significant amount of noise all the way to the 3100 level. Because of this, I think it is very precarious at the moment and it is not until we break in one direction or the other, either above 3100 or below 3000 that you can put serious money to work, unless of course you are a day trader looking to simply go back and forth.
If you are looking for a longer-term swing trade, the best trade right now is to be on the sidelines and simply ignore the day-to-day noise. Does the economic condition warrant the S&P 500 been all the way appear? No, of course it does not but that has not mattered for 12 years.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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