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 got back closer to their local highs yesterday. But will the market break higher?

The S&P 500 gained 1.36% on Tuesday, as it retraced most of the recent declines and it broke slightly above the 4,000 level again. Last week on Thursday it bounced from the local low of around 3,907, and yesterday’s daily high was at 4,005.88.

This morning the broad stock market index is expected to open 0.1% lower following mixed economic data releases. Investors will be waiting for the PMI numbers, Fed Meeting Minutes releases today, among others. However, we may see a lower activity ahead of the long holiday weekend in the U.S.

Futures Contract Trades Along the 4,000 Level

Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading along the 4,000 level this morning. The resistance level is at around 4,050, marked by the recent local high. On the other hand, the support level is at 3,950-3,960.

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 will open slightly lower this morning. We may see an uncertainty following yesterday’s rebound. Investors will be waiting for today’s economic data releases, but overall, we should see a lower volatility ahead of the long holiday weekend in the U.S.

Here’s the breakdown:

• The broad stock market will likely fluctuate following yesterday’s advance.
• It still looks like a consolidation or a relatively flat correction within an uptrend.
• 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