Today, the Start & Poor’s 500 closed at 3991.24. That’s below the magic 4,000 level.
For weeks investors and traders, technically inclined of not, have focused on 4,000 for the Standard & Poor’s 500.
Because it’s a nice round number and the stock market tends to be impressed/obsessed with round numbers.
And because, among those inclined to technical analysis, the index, having broken through technical support at 4,487 (200-day moving average) and 4,362 (50-day moving average), needs some number that indicated support. Hey, point to 4,000 and hope. It’s a strategy, I suppose.
And because, having rallied so strongly for so long, there’s not a significant level of support for prices until the S&P 500 unwinds to around 3,278 back on October 26, 2020.
One reason I suspect for the attention to 4,000 was the hope that the index might hold at that level, eliminating the need to worry about a drop of another 20% (roughly) to 3,200, and the hope that the index would bounce off 4,000.
Which I think is possible in the short run–if the CPI inflation report on Wednesday indicates that at 8.5% the March year over year rate marked the high inflation rate for this cycle.
In the longer run, though, with the global economy still struggling and the Federal Reserve and other central banks just starting to fight inflation with a cycle of interest rate increases, I have to admit that I find it hard to see 4,000 as more than just another number.
