Trading position (short-term, my opinion; S&P 500 futures contract): In my opinion, the short-term outlook is neutral and no positions are currently justified from the risk/reward point of view.
The S&P 500 sold off following the PPI release yesterday – will it break below consolidation?
The broad stock market index lost 1.38% on Thursday, as it got back below the 4,100 level. Stock prices fell after higher than expected Producer Price Index announcement. On Tuesday the market extended the advance from its last Friday’s local low of 4,060.79, and it got close to the 4,160 level. On February 2 the S&P 500 reached new medium-term high of 4,195.44 and last Friday it fell to the mentioned low. Earlier the broad stock market’s gauge was extending its bounce from the January 19 local low of 3,885.54.
Stocks will likely open 0.6% lower this morning, so the S&P 500 will extend its short-term downtrend. Last week it broke below the upward trend line, as we can see on the daily chart:
Futures Contract Trades Below 4,100
Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading along the previous local low and the support level of around 4,050-4,070. On the other hand, the resistance level is now at 4,100-4,120.
Conclusion
The S&P 500 is expected to open lower and it will likely remain below the 4,100 level this morning. Yesterday it sold off, however, the stock market is still trading within an over two-week-long consolidation.
Here’s the breakdown:
- The S&P 500 got back below the 4,100 level on stronger PPI release.
- Stock prices continue to fluctuate following their January advance.
- In my opinion, the short-term outlook is neutral and no positions are justified from the risk/reward point of view.
As always, we’ll keep you, our subscribers, well-informed.
Trading position (short-term, my opinion; S&P 500 futures contract): In my opinion, the short-term outlook is neutral and 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
