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).

S&P 500 accelerated its downtrend yesterday – was it a selling climax?

The S&P 500 index lost 1.18% on Thursday as it further extended its downtrend following Wednesday’s decline of 1.4%. On Wednesday it retraced Monday’s-Tuesday’s rebound on geopolitical uncertainty, stronger U.S. dollar, among other factors, and yesterday the index reached new medium-term low of 4,127.90. It was the lowest since May 24. In early last week the market bounced from the 4,400 resistance level.

Recently stocks were rallying from their local lows along 4,220 level and in the previous week on Tuesday 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 0.3% higher today. So the S&P 500 index may retrace some of its yesterday’s decline. It continues to trade below the downward trend line as we can see on the daily chart:

Futures Contract Trades Below 4,200

Let’s take a look at the hourly chart of the S&P 500 futures contract. It continues to trade below 4,200 level this morning. The resistance level is at 4,200-4,220, marked by the previous support level and the support level is at 4,150-4,170.

Conclusion

The S&P 500 will open higher this morning and it will likely retrace some of its yesterday’s decline. Investors continue to react to quarterly earnings releases. Yesterday after the session’s close we got releases from AMZN, INTC, among others. The index may see a rebound or an upward correction at some point.

Here’s the breakdown:

• Stock prices will likely rebound this morning, however, there’s still an uncertainty following recent declines.
• 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