Trading position (short-term, our opinion; S&P 500 futures contract): In our opinion, the short-term outlook is bullish and long positions are currently justified from the risk/reward point of view.

The S&P 500 index bounced on Thursday, as stocks extended their consolidation, it’s still a potential bottoming pattern.

The S&P 500 index gained 1.75% on Thursday after bouncing from the 3,800 price level once again. Last week on Thursday it reached new medium-term low of 3,764.49, before bouncing back above 3,800. Overall it keeps extending a consolidation following the decline from 4,100 level. In mid-December the S&P 500 has been negatively reacting to the December 14 FOMC interest rate hike, among other factors.

The S&P 500 will likely open 0.8% lower this morning, so the market will further extend its fluctuations along the 3,800 level. The S&P 500 index trades within an over week-long consolidation, as we can see on the daily chart:

Futures Contract – More Sideways Trading Action

Let’s take a look at the hourly chart of the S&P 500 futures contract. Yesterday it bounced within an over week-long trading range, as it reached slightly above the 3,880 level. The resistance level is at 3,900-3,920, and on the other hand, the support level is at 3,800.

Conclusion

The S&P 500 index will likely extend its consolidation this morning. Today is the last trading day of the year, but global markets are relatively calm so far. There have been no confirmed positive signals so far. However, stocks may be forming a bottom here.

Here’s the breakdown:

• The S&P 500 index bounced from the 3,800 level once again.
• There have been no confirmed positive signals so far, however, stocks may be forming a bottom.
• In our opinion, the short-term outlook is bullish and long positions are 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): Long 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