The S&P 500 rose 17.12 points, to 1,142.71. U.S. stocks closed at their highest level in more than four months on Monday, one day ahead of a Federal Reserve meeting as encouraging financial and home builder earnings boosted confidence in the economic recovery.
The S&P has tried to sit above the 1130 level in June, August and last week but failed, so the fact that it has broken up above that point and is staying there is considered a positive sign for the bulls and forcing traders to come back in.
I think investors are looking for more stimulus. Nevertheless, any rally that is induced by stimulus is not sustainable, I think you have to let the cycle play through. In fact, trading could drift back into choppy waters this week as investors return their focus to more economic news on the housing market. Data on housing starts and building permits in August come out Tuesday, while reports on new and existing home sales will be released later in the week.
Market is very overbought, Watch out the bad news come out from the Fed and housing data tomorrow. When market is so overbought, any bad news is very sensitive to traders, they will take it as a excuse to sell.
Technically, the market is heading toward the fibonacci retracement level from the high of 1220 to the low 1010. The 38.2%, 50%, 61.8% and 78.6% fibonacci number are 1090, 1115, 1140 and 1175. Today market reach the 61.8% fib retracement with daily high 1144.86. Just be patient and wait for the reverse day coming. Then we will tell if the market want to go down.
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