EB Daily Market Report - Brief Update - Tuesday, May 6, 2025

I provided a bit of a longer-term view in the Weekly Market Report yesterday. I believe we're heading for new all-time highs later this year, but may have to deal with a bit of back and forth action for a period of time before that.

That's the long-term.

In the short-term, things are a bit dicier. I definitely am leaning bullish, but I recognize the short-term hurdles that the bulls face. First, we're overbought. Second, after a historic 865-point rally in just under one month, we're moving very close to the next critical price resistance level on the S&P 500 at 5782. At Friday's high of 5700, the S&P 500 only had another 1.5% to reach that critical price point. To the downside, the rising 20-day EMA has been holding, so, in my opinion, this is the short-term trading range:

Let's say 5500-5782 as the current range. For me, this is now neutral territory. Anything happening in this range doesn't really favor the bullish or bearish argument, although I guess it could be argued that simply holding onto the gains over the past month should be viewed somewhat bullishly. Still, I'm calling this area neutral.

Once again today, just like yesterday, saw opening gaps to the downside, with mostly bullish action throughout the trading day. This intraday recovery has been a hallmark ever since the March 13th low and, I believe, is extremely bullish for the long-term. I see this as significant accumulation by institutional investors that eventually carries us back to all-time highs.

Finally, it's Fed week. The Federal Reserve began its 2-day meeting this morning and it culminates at 2:00pm ET tomorrow afternoon. Fed Chief Powell always seems to be the "fly in the ointment." Will that be the case again tomorrow? Alls it takes it one small piece of editorializing to suggest the Fed remains an economic roadblock and we could see our major indices once again under attack.

I always expect increasing volatility after the Fed policy statement, but maybe this time is different? Stay tuned.

Happy trading!

Tom