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Will S&P 500 go up or down next week?

My quick answer to that question is “I do not know.”

But I may at least to try to set boundaries for its move next week, so my potential trade would sit outside of those boundaries and safe. So I cannot say where the market would go next week.

Let’s take a look at what may happen however.

Last week, Thursday and Friday set a new tone to the short trend of the market. Long term – we are still heading up and we will once again see a great bull trend this year. But next week story seems to show a different picture. We are most likely heading down.

SPX expectations

The chart above shows a nice move up and break through the channel resistance. Yet last two days are showing slowing down of this trend and turning down. I pictured three possible scenarios of the trend continuation. I expect the market to move down and retest 2080 support before it turns back down.

It can turn into something more dramatic and we may move even lower and retest 2055 lower channel support or 2000 support. But I do not see any catalyst for such dramatic move. This move is very unlikely.

We have a few market moving reports coming out next week. One is a personal income and expenditure report issued on Monday. If the report shows that consumers have more disposable income, this may be seen positive and move the market up.

Second, it is the ISM manufacturing index also reported on Monday. A rising ISM index would be bullish for the market and may push it higher. Last few months ISM index was declining however.

ISM index
(Source: Nasdaq)

If we still see the index declining this may help the market going down.

Lastly, on Friday a traditional employment data will be posted. These may have mixed effect on the market. Too good data may spark a fear that FED may rise interest rates, or spark an optimism about economy improving.

And what about the next week? See my expected boundaries for the week:

SPX expected move

Hopefully, the trend would stay within those boundaries. But to say for sure, we will wait for Monday trading to see which direction the market wants to go.

Good luck for the next week trading.

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