Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): No positions are currently justified from the risk/reward point of view.
Stock prices retraced some of their recent advances yesterday, as the S&P 500 index got back below the 3,800 level. Today, the market will rally back. But will we see new local highs?
The S&P 500 index lost 2.08% on Wednesday, as investors took short-term profits off the table amid U.S. Congressional Elections uncertainty, crypto markets turbulences. The broad stock market index bounced from its Tuesday’s local high of around 3,860 and yesterday’s daily low was at 3,744.22.
This morning the S&P 500 index will likely open 3.1% higher following lower than expected Consumer Price Index release. So it will try to get back to the previous local highs along the 3,900 level.
Futures Contract Rallies Above the Recent High
Let’s take a look at the hourly chart of the S&P 500 futures contract. It’s getting back closer to the previous local highs. The market rallied on consumer inflation data release at 8:30 a.m. The resistance level is at 3,900-3,950.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
The S&P 500 is expected to rally this morning on lower-than-expected inflation release. We may see an attempt at breaking above the recent highs along the 3,900 level. But there may be some profit-taking, as the market gets closer to that resistance level.
Here’s the breakdown:
- The S&P 500 index will likely retrace its recent declines on the U.S. inflation data.
- We’ll likely see another attempt at breaking above the 3,900 level.
- In our opinion, the short-term outlook is neutral.
As always, we’ll keep you, our subscribers, well-informed.
Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): No 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
