A quick follow-up from my last observation when I said about the S&P 500;
"If it breaks below 3,900 and fills the gap below that, then we'll likely see more downside."
The day after I wrote it, the S&P closed up sharply but has since traded back down with two significant distribution days, which was enough to erase the up-day.
Now, the SPX is testing an important area, by my estimation, and I've highlighted the 3,900 level in yellow.
If the SPX fails to hold this level, then the market has pushed the stock index back down below the November 10th gap up on better-than-expected inflation news.
I think it's meaningful if the broad stock index can't hold above the November 10th price action.
We've had some positive economic news this week, but with a hawkish fed in tightening mode, positive economic data is negative for the stock market.
Surprising improvement in Services business sentiment and a greater-than-expected increase in factory orders, along with last Friday's upside surprise from the November Payrolls report, suggests the Fed hasn't done enough to slow the pace of the US economy and inflation.
So, we're once again at an inflection point in the short-term stock market trend.
Let's see how it all unfolds.
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