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 extended their downtrend on Friday – have they reached the bottom?
The S&P 500 index lost 0.48% on Friday, as it further extended its decline. The market kept selling-off on geopolitical uncertainty, stronger U.S. dollar, among other factors. Friday’s low was at 4,103.78 and it was the lowest since May 12. In the previous week the market bounced from the 4,400 resistance level.
Recently stocks were rallying from their local lows along 4,220 level and on October 17 the index reached a local high of 4,394. There’s still a lot of uncertainty about monetary policy, economic growth and geopolitics.
Stocks will likely open 0.6% higher today. So the S&P 500 index may retrace more of its Friday’s decline. It continues to trade below the downward trend line as we can see on the daily chart:
Futures Contract Trades Above 4,150
Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke below the 4,200 level recently. The resistance level is at 4,200-4,220, marked by the previous support level and the support level is at 4,150.
Conclusion
The S&P 500 will likely retrace more of its Friday’s decline following a rebound from 4,100 level. For now, it looks like an upward correction or a consolidation. This week the market will be waiting for the important quarterly earnings release from AAPL on Thursday. There will also be the FOMC Rate Decision on Wednesday.
Here’s the breakdown:
- Stock prices will likely extend their Friday’s intraday rebound this morning.
- The S&P 500 remains below the important 4,200 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
