Trading position (short-term, my opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are currently justified from the risk/reward point of view.

The S&P 500 went close to the 4,000 mark yesterday, but today it’ll likely retrace some of its recent advances – is the uptrend over?

The broad stock market index gained 0.34% on Thursday, but it was very volatile, as investors reacted to consumer inflation number release. The daily high was at 3,997.76, which was the highest since December 14. Recently the broad stock market broke above its three-week-long trading range and it retraced more of its mid-December’s decline.

The S&P 500 index is expected to open 0.9% lower following banking stocks earnings releases. We’ll see a profit-taking action following the recent run-up. The index bounced from the 4,000 level, as we can see on the daily chart:

Futures Contract Trades Below 4,000

Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke above the 4,000 level yesterday, but optimism didn’t last long. So the resistance level remains at around 4,000-4,050. On the other hand, the support level is at 3,950, among others.

Conclusion

The stock prices will open lower this morning, as investors are likely to take short-term profits off the table ahead of earnings releases season, long holiday weekend. However, there have been no confirmed negative signals and the market remains within an uptrend after breaking above the recent trading range.

Here’s the breakdown:

• The S&P 500 index is expected to retrace some of its recent rally.
• Stock prices may fluctuate ahead of the earnings releases.
• In my opinion, the short-term outlook is still bullish and long 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): Long 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