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.
Stocks extended their downtrend yesterday, but at the end of the day they were only slightly lower vs. Monday’s closing prices. So is this finally a bottoming pattern?
The S&P 500 index lost 0.21% on Tuesday, after breaking down to the new medium-term low of 3,623.29 – 21 points below its low from Monday. The index lost 496 points or 12% from 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.
Today the broad stock market will likely open 0.5% higher and we may see some further short-term fluctuations. For now, it looks like a consolidation and a potential bottoming pattern before a more meaningful rebound.
Futures Contract Bounces From New Low
Let’s take a look at the hourly chart of the S&P 500 futures contract. It went to the new low of around 3,613 this morning, but news from the Bank of England sent global markets higher. For now, it looks like an upward correction.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
The S&P 500 index will likely open higher this morning and we may see an attempt at retracing some of the recent declines. There’s still a lot of uncertainty and fear, but a clearly bearish sentiment (just check it at the AAII webpage: https://www.aaii.com/sentimentsurvey ) may point to a short-term bottom in the near-term.
Here’s the breakdown:
- The S&P 500 fluctuates within a volatile consolidation following the recent sell-off; we may see some further uncertainty.
- 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
