This week the SPX will likely test the 200-day moving average. The weekend futures action remained highly stable. This is setting the equities markets up for this test.
Should the markets manage to close higher than the 200-dma on Friday, this is likely a positive sign for the markets.
On top of that, we’re about to pass the 1-year mark of last year’s January/February collapse. For a lot of quantitative models, this should be a bullish signal.
This is probably not a breakout week (especially with Government Shutdown 2.0 on the horizon), but a consolidation around this range with a push above the 200-dma would be an optimistic sign.
If the markets do fall, look for the 50-dma to be support. A breach of this level of support would signal a more substantial move lower (with about a 6% correction baked into the current scenario).
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