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 bounced sharply from their new medium-term lows yesterday. So we’ve got an upward reversal – will the uptrend continue or was it just a correction before another leg down?
The S&P 500 index gained 2.6% on Thursday, as it bounced from the new medium-term low of 3,491.58. Shortly after the opening of the trading session the market has reversed its sell-off and continued higher. The index got back above the 3,600 level. There’s still a lot of fear concerning Central Banks’ tightening monetary policies, Russia-Ukraine war and an energy crisis. But yesterday’s trading session was clearly bullish and in the near term stocks may further extend their gains.
This morning the S&P 500 will likely open 0.4% higher following the Retail Sales release and quarterly earnings releases from some major banks. We may see an attempt at getting back to the 3,700 level.
Futures Contract – Back Within a Consolidation
Let’s take a look at the hourly chart of the S&P 500 futures contract. Yesterday in the morning it broke below the recent lows. However, the contract bounced sharply from the 3,500 level and quickly retraced the decline. The resistance level is at 3,800, and the support level remains at 3,550-3,600.
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 index is expected to open higher this morning. It will likely extend yesterday’s advance following a relatively flat overnight correction. The market looks bullish in the short-term, however, the medium-term trend is still down.
Here’s the breakdown:
- S&P 500 bounced from the new medium-term low yesterday; we may see some more advances in the near term.
- 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
