Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).

Stocks prices advanced on Tuesday as investors’ sentiment turned bullish ahead of today’s CPI data – will they continue higher?

The S&P 500 index gained 0.67% on Tuesday as it retraced most of the recent declines. Last week on Thursday the market retraced its rally and it closed the previous Friday’s daily gap up. Earlier it retraced all of its mid-June declines following economic data releases, among other factors. On Friday June 30 the index reached new medium-term high of 4,458.48. Yesterday’s daily high was at 4,443.64 so the market got very close to its medium-term high again.

There is still a lot of uncertainty concerning monetary policy, some technology stocks’ valuation concerns, but the investors’ sentiment remains bullish.

Stocks will likely open 0.8% higher following slightly lower than expected Consumer Price Index release. It was at +0.2% vs. the expected +0.3% m/m. The market extends its sideways trading action as we can see on the daily chart:

Futures Contract Trades Above 4,500

Let’s take a look at the hourly chart of the S&P 500 futures contract. Recently it rallied up to the 4,500 level and on Thursday it retraced some of that rally. Today the market is trading above the 4,500 level. The nearest important support level is now at around 4,470.

Conclusion

The S&P 500 index will likely extend its yesterday’s advance on the CPI release, among other factors. Investors will be also waiting for the coming quarterly corporate earnings releases.

There have been no confirmed negative signals so far. For now it looks like a relatively flat correction within an uptrend. However, the market may see a more pronounced profit taking action at some point.

Here’s the breakdown:

• The S&P 500 is expected to open higher following consumer inflation data.
• There have been no confirmed negative signals.
• In my opinion, the short-term outlook is bullish and long positions are still 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): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).

Thank you.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care