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 went sideways on Tuesday – are they forming a short-term bottom?
The S&P 500 index gained 0.10% on Tuesday, as it broke its losing streak after bouncing from the 3,800 level. However, it slightly extended the downtrend and the daily low was at 3,795.62. The market reacted to the last week’s Wednesday’s FOMC interest rate hike, among other factors.
Stock prices will likely open 0.7% higher this morning, as the sentiment improved despite yesterday’s Bank of Japan’s monetary policy release. The markets were very volatile, but they didn’t extend their declines.
Recently the S&P 500 index broke below its two-month-long upward trend line and moved sharply lower after getting back to that line last week, as we can see on the daily chart:
Futures Contract is Closer to 3,900 Again
Let’s take a look at the hourly chart of the S&P 500 futures contract. Yesterday it reached new local low of around 3,804. Since then it has been slightly rebounding and getting closer to the resistance level of 3,900-3,950.
Conclusion
The S&P 500 index will likely extend its yesterday’s bounce this morning. For now, it looks like an upward correction within a downtrend. Investors will be waiting for today’s CB Consumer Confidence release at 10:00 a.m.
Here’s the breakdown:
- The S&P 500 index bounced despite negative sentiment and the BoJ surprising policy shift.
- Today it will likely extend a bounce and get closer to the 3,900 level again..
- 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
