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 losses on Friday – are they getting closer to a bottom?
The S&P 500 index lost 0.23% on Friday as it slightly extended its sell-off following Wednesday’s FOMC monetary policy release. The index went the lowest since June again. Friday’s daily low was at 4,316.49. There’s still a lot of uncertainty about monetary policy and economic growth.
Stocks will likely open 0.1% lower today so the S&P 500 may go sideways and along the 4,300 level for some time. Last week it broke below mid-August local low as we can see on the daily chart:
Futures Contract Extends the Decline
Let’s take a look at the hourly chart of the S&P 500 futures contract. It’s trading below the previous low this morning. The support level is still at around 4,350 and the resistance level remains at 4,400.
Conclusion
The S&P 500 will likely extend its downtrend again. 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 extended their sell-off following the Wednesday’s FOMC release.
- The S&P 500 went the lowest since early June; there may be a short-term bounce at some point.
- 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
