Trading position (short-term, my opinion; S&P 500 futures contract): In my opinion, the short-term outlook is neutral and no positions are currently justified from the risk/reward point of view.

The S&P 500 retraced most of its recent declines yesterday – will it get back to highs?

The broad stock market index gained 1.14% on Monday following its Friday’s bounce of 0.2%, as it got back above the 4,100 level. On Friday It bounced from the new local low of 4,060.79. Last week on Wednesday and on Thursday the market was declining on stronger U.S. dollar, global markets’ sentiment. The S&P 500 retraced some of its January rally after bouncing down from 4,200 resistance level. On February 2 the S&P 500 reached new medium-term high of 4,195.44 and last Friday it fell to the mentioned low. Earlier the broad stock market’s gauge was extending its bounce from the January 19 local low of 3,885.54.

Stocks will likely open 0.1% higher after the important Consumer Price Index release. The data was basically as expected at +0.5% m/m (CPI core +0.4% m/m). So we’ll see more uncertainty and a consolidation following January advances. The S&P 500 broke below the upward trend line last week, as we can see on the daily chart:

Futures Contract Bounced After Data

Let’s take a look at the hourly chart of the S&P 500 futures contract. It bounced up to the 4,180 level following the CPI number release, but it’s now trading along the 4,150 level. The nearest important resistance level remains at 4,180-4,200.

Conclusion

The S&P 500 will likely open virtually flat this morning following as-expected consumer inflation data release. It still looks like a relatively flat correction within an uptrend.

Here’s the breakdown:

• The S&P 500 is expected to open flat this morning, despite the important inflation data release.
• Stock prices continue to fluctuate following their January advances.
• In my opinion, the short-term outlook is neutral and no positions are justified from the risk/reward point of view.

As always, we’ll keep you, our subscribers, well-informed.

Trading position (short-term, my opinion; S&P 500 futures contract): In my opinion, the short-term outlook is neutral and 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