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 continued their rebound despite Middle East worries – will S&P 500 get back to 4,400?

The S&P 500 index gained 0.52% on Tuesday as it extended its recent advances following last week’s Friday’s rebound. On Friday the market rallied after better-than-expected monthly jobs data, among other factors. The index bounced from the 4,220 level and yesterday it traded as high as 4,385.

Recently the broad stock market index retraced some of the declines, but eventually it went below the 4,300 level again. On Friday it went back above it. There’s still a lot of uncertainty about monetary policy, economic growth and geopolitics.

Stocks will likely gain 0.3% this morning despite higher-than-expected Producer Price Index data. So the S&P 500 may get closer to the 4,400 level. It traded within its Sept. 21 daily gap down of 4,375.70-4,401.38 as we can see on the daily chart:

Futures Contract Is Slightly Above 4,400

Let’s take a look at the hourly chart of the S&P 500 futures contract. Last week on Tuesday it reached new low of around 4,235 before bouncing back above the 4,300 level. This morning it’s trading along the 4,400 level. The resistance level is at 4,420-4,440 and the support level remains at 4,350.

Conclusion

The S&P 500 will likely open 0.3% higher today. So it may retrace its yesterday’s intraday retreat and get closer to the 4,400 level again. Investors will now wait for the important CPI release tomorrow. The market will be also waiting for the coming quarterly earnings announcements.

Here’s the breakdown:

• Stocks keep advancing despite negative geopolitical news.
• The S&P 500 got close to its late September daily gap down; it is acting as a resistance 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