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 went sideways on Tuesday, as investors took some short-term profits off the table following the recent advances. Is this a topping pattern or just consolidation?

The S&P 500 index lost 0.67% on Tuesday following its Monday’s decline of 0.28%, as it fluctuated after last week’s rally and a breakout above the 4,000 level. Last week the broad stock market’s gauge extended an over month-long uptrend from the medium-term low of 3,636.87 (June 17), despite the ongoing worries about inflation, tightening Fed’s monetary policy, and Russia-Ukraine conflict. This morning the S&P 500 will likely open 0.7% higher, so we may see some more short-term fluctuations.

Futures Contract Extends its Consolidation

Let’s take a look at the hourly chart of the S&P 500 futures contract. It continues to fluctuate along the 4,100 level. For now, it looks like a short-term consolidation and a relatively flat correction within an uptrend.

In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):

Conclusion

This morning the S&P 500 index is expected to open 0.7% higher. It may see an attempt at breaking higher and extending the uptrend. The resistance level remains at 4,150 though. For now, it looks like a relatively flat correction within an uptrend.

Here’s the breakdown:

• The S&P 500 continues to trade within a short-term consolidation; there have been no confirmed negative signals so far.
• 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