The Old Normal?

It appears some of the volatility of the last few weeks may be dissipating from the markets finally.  Last week’s move in the S&P500 finished every-so-slightly higher, ending the week-over-week slide for the index.  It appears the price movement may stay between 2700 and 2800 for the week (and yes, 100 points sounds like a big range, until you realize the S&P500 had been having intra-day swings of over 100 points just three weeks ago.

Perhaps the biggest thing to watch for the week is Jerome Powell.  While there is a fair amount of fundamental economic data that would typically move the markets this week, the markets are looking for assurance that the new Fed Chair is not going to deviate largely from his predecessor Yellen’s generally dovish policies.  A slow, steady, data-dependent and measured approach to increasing interest rates is what the market is looking for.  Anything to the contrary and we could see volatility spike yet again.

With the futures are indicating a push for the the S&P500 back into the mid 2750’s again, it’s likely the trading range for the week will pivot around this amount.  While it’s possible the markets could break out to the high side, the set-up appears more measured at this point.  It looks like more range-bound trading as the markets — with 2700 being the primary support level, and 2800 being the primary resistance level — until the markets are comfortable Fed policy isn’t going to radically shift.


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