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One day fluke? The next step in an end of year Santa Claus rally? Huge bear market trap? The beginning of the next big Bull market?

Tough questions to answer but important for figuring out an investment strategy for NOW.

So here are three things that I’ll be watching in the next few days.

1. I’m looking for signs of a return of FOMO, fear of missing out. That’s an emotion that can send investors to fling money into chasing stocks that are rising because, well, who wants to miss the gains. Look for indications that higher prices are pulling investors and traders into the market rather than making them sell to lock in gains. Today, for example, stocks retreated a bit in the last 30 minutes of trading with the Standard & Poor’s 500 going from a gain of 2.01% at 3:30 p.m to a close at 1.91%. That’s not an indicator of much of anything since the market usually pulls back at the end of a day of big gains because some traders are reluctant to hold positions overnight. But a bigger end of the day pullback on an up day might be a sign that FOMO isn’t in full flood yet. On the other hand, a big blow out finish on an up day could indicate that more than a few investors are worried about being left behind by a rally.

2. I’m look for signs of Wall Street overshoot. Th consensus priced into the bond and money market futures markets is looking for a drop in the Fed’s funds rate of 75 basis points starting in July. But it would be a surprise if a rally like that of the last week or two didn’t push some Wall Street strategists to forecasts of a much bigger drop in the Fed’s policy rate. UBS, for example yesterday said that it expects rate cuts of 275 basis points in 2024 with the first cut coming in March. To be fair to UBS, this isn’t a mindless Bull call after a big up day.The investment bank is looking for the U.S. economy to slip into recession n 2024–which would prompt the Fed to cut rates. But keep an eye out for upside outlier forecasts of interest rate cuts as Wall Street analysts compete to see who can get farthest ahead of the consensus.

3. I’m watching technical support and resistance levels. Technicals can become self-fulfilling prophecies as investors rush to follow charts that show stocks moving above key levels. Right now I’d watch the 4500 level on the S&P 500. This has been tagged as a key to market direction along the lines of “If the index can close significantly above 4500, more gains could be anticipated.” At 3:30 p.m. in New York today the S&P 500 was just above 500 at 4506,76. At the end of the day it would close at 4495.70, just below that important chart level. Watch 4500 here.