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.
The S&P 500 index extended its short-term fluctuations yesterday. This morning it will likely open lower after the important jobs data release. So will it remain within a consolidation?
The S&P 500 index lost 1.02% on Thursday, as it continued to trade within a consolidation following Monday’s-Tuesday’s rally of around 6%. On Wednesday, the daily high was at 3,806.91 and last on Friday the index was the lowest since November of 2020. Last Friday’s daily low was at 3,584.13 – 13% below its September 12 local high of 4,119.28. There’s still a lot of fear concerning Central Banks’ tightening monetary policies, Russia-Ukraine war and an energy crisis. However, on Monday stock prices jumped on news that the UN called Central Banks to halt their monetary tightening plans, among other factors.
This morning the S&P 500 is expected to open 0.9% lower following better-than-expected jobs data release. We will likely see more profit-taking action after the recent rally. It still looks like a downward correction.
Futures Contract – Downward Correction
Let’s take a look at the hourly chart of the S&P 500 futures contract. It went above the 3,800 early this week. Right now, it is trading closer to the 3,700 support level, marked by the previous local highs.
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 likely open lower this morning. It may retrace more of its Monday’s-Tuesday’s rally. It still looks like a downward correction following that rally.
Here’s the breakdown:
- Stock prices will open lower after monthly jobs data release; S&P 500 may get closer to the recent lows.
- 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
