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 sold off after Fed – will they continue lower today?
The S&P 500 index lost 0.94% on Wednesday, as investors reacted to hawkish remarks from the Fed Chair Powell. The index went the lowest since late August and it got close to the 4,400 level. Last week it was gaining after the CPI and PPI releases, but on Friday stocks retraced that advance. There’s still a lot of uncertainty about monetary policy, economic growth and stock prices continue to move sideways after their advances from March to July.
Stocks will likely open 0.9% lower on post-Fed bearish sentiment. So the index may break below the 4,400 level. The market will get closer to its mid-August local low again as we can see on the daily chart:
Futures Contract Keeps Selling Off
Let’s take a look at the hourly chart of the S&P 500 futures contract. It’s trading close to the 4,400 level today. The next support level is at 4,350-4,360, among others.
Conclusion
The S&P 500 will likely extend its yesterday’s decline this morning. Investors’ sentiment worsened following the FOMC Press Conference yesterday.
Recently the investors’ sentiment has been improving as the pressure for further monetary policy tightening somewhat was easing. But stocks retraced most of their late August rally after bouncing off their mid-July local lows resistance level.
Here’s the breakdown:
- Stocks will likely extend their yesterday’s intraday decline.
- The S&P 500 gets closer to mid-August local lows; 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
