Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are currently justified from the risk/reward point of view.
The S&P 500 bounced from new local low on Friday – was it a short-term bottom?
The broad stock market index lost 1.05% on Friday, as it continued its short-term downtrend following higher-than-expected Core PCE Price Index release. The daily low was at 3,943.08, but the index closed 27 points above the price level. There are still fears about monetary policy tightening following a series of better-than-expected economic data releases.
Recently the index bounced from a local high of around 4,160 and last week it broke below the short-term trading range. Stocks accelerated their downward correction from the S&P 500’s February 2 new medium-term high of 4,195. Earlier the broad stock market’s gauge was extending its bounce from January 19 local low of 3,885.54.
Stock prices are expected to open 0.8% higher this morning. So the market will get close to the 4,000 level again. In early February the index broke below the upward trend line, as we can see on the daily chart:
Futures Contract Is Above 4,000
Let’s take a look at the hourly chart of the S&P 500 futures contract. It came back above the 4,000 level this morning. The resistance level is at around 4,030, marked by the recent local highs.
Conclusion
The S&P 500 index will likely retrace most of its Friday’s decline this morning. The market may have formed a short-term bottom, however, there have been no confirmed positive signals so far.
Here’s the breakdown:
- Stock prices will open higher this morning, as investors’ sentiment improves after last week’s correction.
- The S&P 500 may get back above the 4,000 level.
- In my opinion, the short-term outlook is bullish and long positions are 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 currently justified from the risk/reward point of view.
Thank you.
Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
