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.
Stocks bounced from new lows on Friday, but the sell-off may continue today.
The S&P 500 index lost 0.28% on Friday, after bouncing from the new local low of 4,047.95. On Thursday the index lost 1.4% following higher than expected Producer Price Index announcement. It fell from its Tuesday’s local high of around 4,160. Stocks extended 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.
The S&P 500 index will likely open 0.7% lower today. So, the market is expected to re-test its Friday’s local low. In early February it broke below the upward trend line, as we can see on the daily chart:
Futures Contract Is at New Short-Term Low
Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading slightly below the Friday’s local low of around 4,060. The support level is at around 4,050, and the next support level is at 4,000. On the other hand, the resistance level remains at 4,100-4,120.
Conclusion
Stocks will likely retrace their Friday’s intraday rebound this morning and the S&P 500 index may get back to its local lows. It still looks like a correction following January advance, however, there have been no confirmed positive signals so far.
Here’s the breakdown:
- The S&P 500 index will likely get back to its Friday’s low.
- Stock prices retrace more of 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
