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 rallied on Wednesday, as the S&P 500 index got back above the 3,700 level. Was it a reversal or just a quick bounce before another leg down?
The S&P 500 index gained 1.97% on Wednesday, as it retraced some of the recent declines following weaker U.S. dollar, among other factors. On Tuesday the new medium-term was at 3,623.29 - 496 points or 12% 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.
This morning the S&P 500 is expected to open 1.2% lower, so we may see profit-taking action following yesterday’s advance. Stock prices will continue to fluctuate within a short-term consolidation.
Futures Contract – More Fluctuations
Let’s take a look at the hourly chart of the S&P 500 futures contract. Yesterday it went to the new low of around 3,613, but news from the Bank of England sent global markets higher. This morning, the markets retrace some of their yesterday’s rally. The resistance level remains at around 3,750.
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 is expected to open lower this morning following global stock markets’ decline on renewed fears about inflation, tightening monetary policies. There’s still a lot of uncertainty and fear, but a clearly bearish sentiment points to a bottom forming.
Here’s the breakdown:
- The S&P 500 will open lower this morning; the market may further extend its consolidation.
- 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
