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 went south again, as investors reacted to better-than-expected monthly jobs data release. Will the market break below the previous low?

The S&P 500 index lost 2.80% on Friday, as it retraced most of its last week’s Monday’s-Tuesday’s rally following better-than-expected Nonfarm Payrolls, Unemployment Rate releases. On Wednesday, the daily high was at 3,806.91 and on the previous Friday the index was the lowest since November of 2020. The previous Friday’s daily low was at 3,584.13 – 13% below its September 12 local high of 4,119.28. There’s still a lot of fear concerning Central Banks’ tightening monetary policies, Russia-Ukraine war and an energy crisis.

This morning the S&P 500 is expected to open 0.1% higher. We will likely see a lower volatility and a consolidation amid the Bank Holiday.

Futures Contract – Closer to Medium-Term Low

Let’s take a look at the hourly chart of the S&P 500 futures contract. Last week it went above the 3,800, but on Friday it reversed almost all of the rally. The support level is 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

Stocks prices will likely open virtually flat this morning. We’ll likely see a lower volatility and the market may fluctuate along the late September consolidation. The markets will be waiting for Wednesday’s PPI, Thursday’s CPI and Friday’s Retail Sales releases.

Here’s the breakdown:

• S&P 500 retraced most of its recent rally on Friday; the previous low may act as a support 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