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 broke below 4,400 – will downtrend continue?
The S&P 500 index lost 1.64% on Thursday as it accelerated its downtrend after breaking below the 4,400 level. Investors reacted to the Wednesday’s FOMC monetary policy release and hawkish remarks from the Fed Chair Powell. The index went the lowest since June. Last week it was gaining after the CPI and PPI releases, but on Friday stocks retraced the advance. There’s still a lot of uncertainty about monetary policy and economic growth.
Stocks are expected to open 0.5% higher today. So the S&P 500 will likely retrace some of its yesterday’s sell-off. It broke below mid-August local low yesterday as we can see on the daily chart:
Futures Contract Is Below 4,400
Let’s take a look at the hourly chart of the S&P 500 futures contract. It’s trading along the late August local lows this morning. The support level is at around 4,350 and the resistance level is now at 4,400.
Conclusion
The S&P 500 is expected to open higher this morning, so it may retrace some of its yesterday’s sell-off. Investors’ sentiment worsened following the FOMC Press Conference on Wednesday. Recently it was 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 and yesterday they accelerated the decline.
Here’s the breakdown:
- Stocks sold off following the Wednesday’s FOMC release.
- The S&P 500 broke below its mid-August local lows, but 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
