Market Analysis: The S&P Moves Towards 2,000. What Can Stop It?

Overnight the S&P 500 closed at 1,997.92, within reach of 2,000. Can this level be achieved today, Tuesday? We will be watching, but there could be some storm clouds as geopolitical tensions rise in the Ukraine. There is a meeting between Russia, the European Union and the Ukraine scheduled for today.

Earlier this week, the S&P 500 breached the technically important 2,000 barrier on Monday before falling back below. It did close at a record high of 1,998. The DJIA was up 75 points to finish at 17,076 and the NASDAQ Composite was up just over 18 points to close at 4,557. It should be noted, that this was the lowest volume day of 2014.

When nobody is around and there is no volume, there is no reason to sell. The only real news you had last week was ECB Chief Mario Draghi and U.S. Fed Chair Janet Yellen at the end of last week. The spin was, Draghi was too dovish and Yellen a bit less dovish.

The equities markets are being supported by the possibility of more central bank easing  and have looked past political events like the Ukraine and Middle East. On Monday, the Ukraine said Russia sent soldiers across their border as they moved into southeast Ukraine. This will add more tension ahead of the meeting between Russian President Vladimir Putin and Ukraine’s President Petro Poroshenko. This meeting is taking place in Minsk, and being hosted by the EU. What are the markets hoping for? A short term deal that would stand armies down would be nice. As for a long term deal, that will not happen.

Besides this meeting in Europe, there is a whole slew of U.S. economic data today from durable goods, Case Shiller home prices to consumer confidence. We also have corporate earnings reports from Best Buy (NYSE: BBY) and a number of other S&P components slated today.

The Ukraine is the wildcard for today’s news. The EU economy has shown signs of losing what little momentum it has since sanctions hit against Russia. While, investors, for now are being rational and ignoring news out of Lybia and the rest of the world, there are problems. They could be ignoring these problems because of bigger issues like the Fed and ECB who are getting ready to issue their economic forecasts next month. The equities markets are waiting for more EB easing and more information on the Fed’s exit strategy towards monetary policy normalization.

There are geopolitical tensions that could weigh heavily on the S&P 500 today, as well as the financial markets in general. From the Ukraine to the ongoing war between Israel and the Hamas. However the biggest lion in the Middle East is the rise of the Islamic State (ISIS). ISIS or IS could pose the biggest threat to oil price instability as well as political and economic turmoil throughout the world.