Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).
Stocks accelerated their downtrend on Tuesday – is a bottom near?
The S&P 500 index lost 1.47% on Tuesday as it broke below the 4,300 level. The market continues its sell-off after last Wednesday’s FOMC monetary policy release. Yesterday the index went the lowest since early June. There’s still a lot of uncertainty about monetary policy and economic growth.
Stocks will likely open 0.3% higher today. So the index may get closer to the broken 4,300 level. It retraced more of the June rally yesterday as we can see on the daily chart:
Futures Contract – Intraday Bounce
Let’s take a look at the hourly chart of the S&P 500 futures contract. This morning it’s bouncing from the new local low of around 4,305. The support level is now at 4,300 and the resistance level is at 4,350.
Conclusion
The S&P 500 extended its sell-off yesterday and today it will likely bounce at the open. The market may fluctuate following the declines. For now it looks like a potential consolidation within a downtrend.
Investors’ sentiment worsened following the FOMC Press Conference last week. Recently it was improving as the pressure for further monetary policy tightening somewhat was easing. But stocks retraced their late August rally after bouncing off their mid-July local lows resistance level. There have been no confirmed positive signals so far. However, the market may see a bounce at some point.
Here’s the breakdown:
- Stocks continued their downtrend yesterday as investors’ sentiment remained bearish after last week’s Fed.
- The S&P 500 broke below the 4,300, but today it will likely get back to that level.
- In my opinion, the short-term outlook is still bullish and long positions are still justified from the risk/reward point of view.
As always, we’ll keep you, our subscribers, well-informed.
Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).
Thank you.
Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
