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.
The S&P 500 index continued its short-term uptrend on Tuesday, but it retraced some of the advance before a close of the day. Was it a local high or just correction before another leg up?
The broad stock market index gained 0.56% on Tuesday, following its Monday’s gain of 1.0%, as it extended the advance after breaking above the 3,800 level. The daily high was at 3,859.40, but yesterday’s closing price fell around 30 points below that local high.
This morning the S&P 500 index will likely open 0.4% lower on U.S. Congressional Elections outcome uncertainty, among other factors. It still looks like an upward correction following the recent declines. However, we may see an attempt at reversing the downtrend and the index may re-test the resistance level of 3,900 at some point. The market will be waiting for the important Consumer Price Index release tomorrow.
Futures Contract – Short-Term Consolidation
Let’s take a look at the hourly chart of the S&P 500 futures contract. Recently it bounced from the support level of 3,650-3,700. Yesterday the market fluctuated along the resistance level of 3,850, and this morning it is trading closer to the 3,800 level.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
Stock prices are expected to open slightly lower this morning. There’s an uncertainty ahead of tomorrow’s consumer inflation number release. We may see some more sideways trading action, as investors also await the U.S. Elections’ results.
Here’s the breakdown:
- The S&P 500 index retraced more of its recent declines yesterday.
- There’s still a lot of fear concerning Fed’s monetary tightening amid better-than expected economic data releases.
- 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
