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 retraced their Thursday’s rally on Friday, so investors’ sentiment improvement was a short-lived one. Today we may see another attempt at reversing the downtrend though. Is this a bottoming pattern?

The S&P 500 index lost 2.37% on Friday after gaining 2.6% on Thursday, as stock prices remained volatile following the recent economic data announcements. On Thursday the index bounced from the new medium-term low of 3,491.58. There’s still a lot of fear concerning Central Banks’ tightening monetary policies, Russia-Ukraine war and an energy crisis.

This morning the S&P 500 will likely open 1.5% higher, so it may see another attempt at reversing the downtrend. Investors will now wait for the coming quarterly corporate earnings – tomorrow from NFLX, TSLA on Wednesday, among others.

Futures Contract – More Sideways Trading Action

Let’s take a look at the hourly chart of the S&P 500 futures contract. It retraced the Thursday’s rally on Friday, but this morning the market is trading above the 3,600 level again. It is trading within a short-term consolidation.

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 open higher this morning. It will likely continue to fluctuate within a short-term consolidation. It may be a bottoming pattern. However, there have been no confirmed positive signals so far.

Here’s the breakdown:

• S&P 500 remained very volatile on Thursday and Friday; this morning the sentiment is bullish, but stock prices are basically going sideways since late September.
• 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