We’re continuing our neutral bias and laying out critical inflection points that can guide us moving forward. Over the last few weeks, we laid out a key level for the S&P 500 (ES) at $4,743, broke it, and saw the recent pullback.
On the weekly chart, the ES pulled back to the weekly 21 exponential moving average (EMA) and bounced off this marker.
On the daily chart, the ES gained support and ripped off the Ichimoku Cloud top.
Overall, we are in neutral territory since the recent drop was due to comments from the Federal Open Market Committee (FOMC). The next meeting will be Wednesday, Jan. 26, at 2 p.m. Eastern which could be the next catalyst for a push higher… or another pullback.
Heading into the next FOMC meeting, one zone we’re watching is the top of the daily Ichimoku Cloud near $4,600 to $4,620. If the ES treads above this range, we shouldn’t see too much danger to the downside. If it starts to break this Cloud range, we could see a drop to the $4,500 psychological level at the bottom of the Cloud.
Remember we’re here to set the tone, define key levels, and use inflection points to lay out a road map for the weeks ahead.
Stay Focused!