Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).
The S&P 500 bounced off the 4,200 level – is the uptrend over?
The broad stock market index lost 1.12% on Tuesday as it broke below its Friday’s and Monday’s lows. Stock prices were going down amid short-term profit-taking action caused by the debt ceiling deal fears, among other factors. On Friday the S&P 500 was the highest since last year’s August after bouncing from May 4 local low of 4,048.28.
Stocks are expected to open 0.4% lower this morning. So the index will likely extend its yesterday’s downward correction. The S&P 500 came back closer to the recent trading range yesterday as we can see on the daily chart:
Futures Contract Trades Below 4,150 Again
Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading along the 4,140 level this morning. The next support level is at around 4,100-4,120, marked by the previous lows. On the other hand, the resistance level is at 4,180-4,200.
Conclusion
The S&P 500 will likely open lower this morning. It is retracing the recent advance after bouncing from the 4,200 resistance level. For now it looks like a correction within an uptrend.
Here’s the breakdown:
- The S&P 500 bounced from the medium-term resistance level of 4,200.
- The market may extend its downtrend after retracing its recent breakout.
- In my opinion, the short-term outlook is bullish and long positions are still 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): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).
Thank you.
Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
