Trading position (short-term, my opinion; S&P 500 futures contract): In my opinion, the short-term outlook is neutral and no positions are currently justified from the risk/reward point of view.

Stock prices fluctuated after their recent declines yesterday – will the downtrend resume?

The S&P 500 index gained 0.53% on Thursday, as it bounced from the new local low of 3,969.19. The market bounced back slightly above the 4,000 level. There are still fears about monetary policy tightening following a series of better-than-expected economic data releases.

Last week on Tuesday the index bounced from a local high of around 4,160 and this Tuesday it broke below the short-term trading range. Stocks accelerated their downward correction from the S&P 500’s February 2 new medium-term high of 4,195. Earlier the broad stock market’s gauge was extending its bounce from January 19 local low of 3,885.54.

Stock prices will likely open 1.2% lower this morning following higher-than-expected Core PCE Price Index release (it was at +0.6% vs. the expected +0.4% m/m). So the market will continue its downtrend. There have been no confirmed positive signals. In early February the index broke below the upward trend line, as we can see on the daily chart:

Futures Contract Is at New Local Low

Let’s take a look at the hourly chart of the S&P 500 futures contract. It went to the new local low after breaking below the 4,000 level again. The next support level is at around 3,900-3,950, and the resistance level is now at 4,000-4,030.

Conclusion

The S&P 500 index is expected to open much lower this morning after higher-than-expected Core PCE Price Index release. There have been no confirmed positive signals. However, it still looks like a correction of the previous advances, and the market may find a short-term bottom at some point.

Here’s the breakdown:

• Stock prices will likely open much lower following economic data releases.
• The S&P 500 may extend the downtrend, but there may be an intraday bounce at some point.
• In my opinion, the short-term outlook is neutral and no positions are justified from the risk/reward point of view.

As always, we’ll keep you, our subscribers, well-informed.

Trading position (short-term, my opinion; S&P 500 futures contract): In my opinion, the short-term outlook is neutral and 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