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 slightly extended their downtrend on Tuesday, but overall the market remained within a short-term consolidation ahead of today’s Fed’s Rate Decision release. Is this a bottoming pattern?
The S&P 500 index lost 1.13% on Tuesday after bouncing from its new medium-term low of 3,827.54. It extended a short-term consolidation below the 3,900 level. In early September the market bounced from that level and last week on Monday the local high was at 4,119.28. Since then, the index lost almost 300 points, as investors feared monetary policy tightening. Today we will get the important Fed’s release at 2:00 p.m., so maybe we’ll see some “sell the rumor, buy the news” trading action. The S&P 500 index is expected to open 0.6% higher and we will certainly see an increased volatility later in the day.
Futures Contract – More Short-Term Fluctuations
Let’s take a look at the hourly chart of the S&P 500 futures contract. It continues to fluctuate along the 3,900 level, and the support level remains at 3,850-3,900. On the other hand, the resistance level is at 3,950-4,000, among others.
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 is expected to open higher this morning and stock prices will likely further extend their short-term consolidation. However, it will be all about the Fed’s monetary policy release at 2:00 p.m. and the Fed’s Press Conference at 2:30 p.m.
Here’s the breakdown:
- The S&P 500 extended its short-term consolidation yesterday; the markets will react to today’s Fed’s release.
- 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
