Short yet crazy week in stock market

This week was shortened due to Labor Day but did not disappoint with the action-packed four days.

From Federal Reserve (Fed) Chairman Jerome Powell speaking to U.S. mortgage rates jumping to the highest level since 2008 and all events in between, there was no lack of catalysts to impact the stock market this week.

On the first day back from holiday, retail traders and Wall Street players seemed to still be on vacation. The headlines were minimal, and so was the price action. Overall, Tuesday was a capitulation day, gearing up for an end-of-week run from the bulls. Tuesday was the only time this week the market closed down.

Action begins with psychological level

Coming into Wednesday, Simpler’s Trading News noted the psychological level of 3,900 as an important target for traders The report provided a road map showing the importance of 3,900.

“Looking ahead this week, if the price can hold above this 3,900 level, it could be a good sign for the bulls,” the article noted

That 3,900 level on the S&P 500 futures was defended Wednesday by the bulls and the rest of the week kept up the pace. 

The bulls had not only defended the crucial psychological level of 3,900, but used it as support to launch the next big move in the market. 

Market gave targets, prices landed accordingly

Wednesday was another bullish day ending green for the second consecutive day. This left retail traders wondering how long this run could last.

Trading News was on top of Powell’s speech and potential upside targets for traders.

“Some of the simpler targets to the upside when looking at the S&P 500 futures include psychological levels such as 4,000. Other than psychological levels, key moving averages such as the 50-day simple moving average (SMA) and the 21-day exponential moving average (EMA) should be considered.”

Price action fulfilled each of these targets on Friday to close the week. 

Bulls close week in strong position

The final bell for the week marked how the bulls had displayed their strength in many ways. The intraday sign of power came from bulls consistently using the volume weighted average price as support, creating a strong trend for the week.

From a macro perspective, the bulls were set to hold and overtake psychological levels ranging from 3,900 to 4,000. Maintaining and surpassing these levels showed that the bulls were in control, leaving no doubt about market sentiment as the week progressed.

The bulls did well displaying that they could handle negative news this week. This was revealed by shaking off losses during Chicago Fed President Charles Evans speech at the Cato Institute 40th Annual Monetary Conference in Washington, D.C.

After a 50-point pullback, the bulls were still able to close the session green.

Looking ahead to next week

As this week ends, there is no time too early to prepare for what is coming next week. 

The three significant economic reports traders should consider next week are U.S. Consumer Price Index (CPI) on Tuesday, U.S. Producer Price Index (PPI) on Wednesday., and the retail sales report on Thursday.