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.
The S&P 500 index suffered another loss on Wednesday. Will it continue the downtrend despite short-term oversold conditions?
The broad stock market index lost 0.78% on Wednesday following its Tuesday’s decline of 1.1%. The S&P 500 remained below the 4,000 level yesterday, and the market was the lowest since late July. It further extended its decline following Friday’s sell-off in a reaction to the Fed Chair Powell’s speech.
In the first half of the month the S&P 500 was extending its two-month-long uptrend from the medium-term low of 3,636.87 (June 17) despite ongoing worries about inflation, tightening Fed’s monetary policy, Russia-Ukraine conflict. On August 16 it reached the local high of 4,325.28, and yesterday the market fell to the new local low of 3,965.21. Today the S&P 500 index is expected to open 0.7% lower and we’ll likely see new short-term lows.
Futures Contract Fluctuates Below the 3,950 Level
Let’s take a look at the hourly chart of the S&P 500 futures contract. It extended its short-term downtrend yesterday and this morning it’s trading within a relatively narrow trading range. The resistance level remains at around 4,000.
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 again following global stock markets’ declines. There have been no confirmed positive signals so far. However, the market seems oversold and we may see a rebound at some point.
Here’s the breakdown:
- The S&P 500 index will likely open lower this morning; the market may be approaching a short-term bottom.
- In our opinion, no positions are currently justified from the risk/reward point of view.
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
