The S&P 500 has rallied again during the trading session on Friday as more signs of inflation being transitory are starting to come to light. There was a lot of concern a couple of days ago when the CPI numbers came out much hotter than anticipated, sending traders are running for cover as they worry about the Federal Reserve having to change its monetary policy. However, retail sales missing by quite a bit during the trading session on Friday has added more fuel to the fire as people are starting to pay attention to the idea of monetary policy being loose for much longer than anticipated, perhaps even forever at this point.
S&P 500 Video 17.05.21
The 50 day EMA has offered significant support, and quite frankly this has been the play all along: by the dips going forward as the Federal Reserve goes out of its way to support asset prices with liquidity measures. Until things change drastically, I just do not see a scenario where you can fight this trade. It is probably only a matter of time before we go looking towards the highs again, and then break above it.
The 4000 level has offered significant support as well, not only due to the psychological importance of the number, but the fact that there was a gap there makes it even more formidable. With this in mind, I do believe that the 4000 level will now offer a bit of a “floor the market”, and I have no interest whatsoever in trying to short anytime soon but would consider buying puts if we close significantly below the 4000 area.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire