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 fluctuated following Friday’s decline – will they break lower?

The S&P 500 index gained 0.07% on Monday as it went sideways following Friday’s decline of 1.2%. Last week the market was gaining after the Wednesday’s CPI and Thursday’s PPI releases, but it retraced the whole 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 are expected to open 0.1% higher today. So the S&P 500 will likely go sideways again. Investors are now waiting for the important FOMC interest rate release tomorrow. The index continues to trade within a consolidation as we can see on the daily chart:

Futures Contract Trades Along 4,500

Let’s take a look at the hourly chart of the S&P 500 futures contract. It’s trading close to the 4,500 level this morning. The resistance level remains at around 4,520 and the support level is at 4,450, among others.

Conclusion

The S&P 500 will likely extend its Monday’s consolidation this morning. On Friday it retraced the recent advances and it extended a two-week-long consolidation below the 4,500 level.

Recently the investors’ sentiment improved as the pressure for further monetary policy tightening somewhat eased. But stocks retraced most of their late August rally after bouncing off their mid-July local lows resistance level.

The markets will be waiting for the important FOMC monetary policy release tomorrow.

Here’s the breakdown:

• Stock prices are expected to extend their short-term consolidation.
• The S&P 500 bounced from the 4,500 level; there may be some more uncertainty following late August bounce.
• 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