Trading position (short-term, our opinion; S&P 500 futures contract): In our opinion, the short-term outlook is bullish and long positions are currently justified from the risk/reward point of view.

Stocks continue to trade within a consolidation – where will they go?

The S&P 500 index gained 0.75% on Wednesday, as it went higher within its over two-week-long trading range. On previous week’s Thursday it reached new medium-term low of 3,764.49, before bouncing back above 3,800. Overall it kept extending a consolidation following the decline from 4,100 level recently. In mid-December the S&P 500 has been negatively reacting to the December 14 FOMC interest rate hike, among other factors.

The S&P 500 is expected to open 0.6% lower following better-than-expected ADP Non-Farm Employment Change release. So we may see more sideways trading action. The S&P 500 index trades within an over two-week-long consolidation and above the 3,800 level, as we can see on the daily chart:

Futures Contract Trades Along 3,850

Let’s take a look at the hourly chart of the S&P 500 futures contract. It continues to trade within a consolidation. The resistance level is at around 3,900-3,920, and the support level remains at 3,800.

Conclusion

The S&P 500 is expected to open lower this morning. The market will be waiting for tomorrow’s monthly jobs data release and the coming quarterly corporate earnings season. There have been no confirmed positive signals so far. However, stocks may be forming a bottom here.

Here’s the breakdown:

• The S&P 500 index keeps extending its short-term consolidation above the 3,800 level.
• There have been no confirmed positive signals so far, however, stocks may be forming a bottom.
• In our opinion, the short-term outlook is bullish and long positions are justified from the risk/reward point of view.

As always, we’ll keep you, our subscribers, well-informed.

Trading position (short-term, our opinion; S&P 500 futures contract): Long 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