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 extended their consolidation on Friday – is the market about to break higher?

The S&P 500 index lost 0.16% on Friday as it extended a week-long consolidation despite recent economic data. Stocks went sideways following Wednesday’s CPI and Thursday’s PPI releases. On Thursday May 4 the S&P 500 fell to the local low of 4,048.28, but it quickly went back to around 4,150. Since then it has been fluctuating within a narrow trading range.

Stocks are expected to open 0.2% higher this morning. So the S&P 500 may see an attempt at breaking above a short-term consolidation. In early May the index bounced from the important 4,200 resistance level as we can see on the daily chart:

Futures Contract Remains Close to 4,150

Let’s take a look at the hourly chart of the S&P 500 futures contract. It is still trading along the 4,150 level. The nearest important resistance level remains at around 4,160-4,200, and the support level is at 4,120, among others.

Conclusion

The S&P 500 index is expected to open slightly higher this morning. Stock prices continue sideways despite the recent economic data releases. It still looks like a consolidation after March-April advances.

Here’s the breakdown:

• The S&P 500 keeps extending its consolidation; there’s still no clear direction following recent data releases.
• The market extends a few-week-long consolidation.
• 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