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 extended their short-term consolidation on Friday. Is it just a flat correction of a downtrend?
The S&P 500 index lost 0.73% on Friday, as it continued to trade sideways and along the 3,950 level. On Monday it reversed lower after a better-than-expected ISM Services PMI release, and on Tuesday it was as low as 3,918.39 (going down from its last week’s local high of 4,100.51).
This morning the S&P 500 will likely open 0.4% higher, so it may see more short-term uncertainty. Investors are waiting for tomorrow’s Consumer Price Index and Wednesday’s FOMC releases. It still looks like a weeks-long consolidation within an uptrend. However, last week on Tuesday the index broke below its two-month-long upward trend line, as we can see on the daily chart:
Futures Contract Remains Below 4,000
Let’s take a look at the hourly chart of the S&P 500 futures contract. It continues to trade along the slight upward trend line. The resistance level remains at 4,000-4,050.
Conclusion
The S&P 500 index will likely extend its short-term consolidation this morning. It’s all about tomorrow’s and Wednesday’s economic data releases. They will likely lead to a breakout of that consolidation.
Here’s the breakdown:
- S&P 500 index went sideways since last week’s Tuesday.
- The market may be forming a short-term bottom, but crucial economic data will set the next direction.
- 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
