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.
Stock prices extended their Monday’s gains yesterday. Is this a new uptrend or still just an upward correction following last week’s sell-off?
The S&P 500 index gained 0.96% on Monday, as it went slightly above the 3,800 level again. It retraced some more of its last week’s sell-off following Wednesday’s FOMC interest rate hike.
This morning the S&P 500 index is expected to open 0.3% higher, so it will likely extend a short-term uptrend. Investors will await the U.S. Congressional Elections outcome. It still looks like an upward correction following the recent declines. However, we may see an attempt at reversing the downtrend and the index may re-test the resistance level of 3,900. The market will be also waiting for the important Consumer Price Index release on Thursday.
Futures Contract Keeps Advancing Above the 3,800 Level
Let’s take a look at the hourly chart of the S&P 500 futures contract. Recently it bounced from the support level of 3,650-3,700. And the nearest important resistance level remains at around 3,850.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
Stocks will likely open slightly higher this morning. They may retrace some more of the recent declines. Investors will be waiting for today’s U.S. Elections outcome and Thursday’s consumer inflation number release.
Here’s the breakdown:
- The S&P 500 index is expected to open slightly higher, as it may extend a short-term uptrend.
- There’s still a lot of fear concerning Fed’s monetary tightening amid better-than expected economic data releases.
- 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
