Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,335 price level, with 4,180 as a stop-loss and 4,550 as an initial price target.

The S&P 500 index rallied on Friday in the last trading hour and it got close to the recent local highs. Will it break above the consolidation?

The broad stock market index gained 2.43% on Friday, as it broke above 4,400 level again. It retraced its Wednesday’s-Thursday’s decline. On last Monday’s low of 4,222.62 the market was 596 points or 12.4% below the Jan. 4 record high of 4,818.62. And on Wednesday it reached the short-term local high of 4,453.23, before going back lower and nearing the 4,300 level again. It still looks like a consolidation within a downtrend, but after the Friday’s rally bulls are on the run again.

Late December – early January consolidation along the 4,800 level was a topping pattern and the index retraced all of its December’s record-breaking advance. This morning it is expected to open 0.2% lower following an overnight consolidation.

The nearest important resistance level remains at 4,450, marked by the recent local high. The resistance level is also at 4,500-4,550. On the other hand, the support level is at 4,300-4,350. The next support level is at 4,220-4,250. The S&P 500 broke above its steep short-term downward trend line on Friday, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract Remains Above the 4,400 Level

Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke above its short-term upward trend line on Friday and today it is trading along the previous local highs and the 4,400 level.

Our last Tuesday’s speculative long position is profitable right now (4,335 price level). (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index bounced from the 4,300 level again. Today it is expected to open slightly lower and we may see a short-term consolidation. The market will be waiting for further quarterly earnings releases (AMD, Alphabet tomorrow, Meta on Wednesday and Amazon on Thursday, among others) and Friday’s monthly jobs data announcement. There is still an uncertainty concerning Russia-Ukraine tensions.

Here’s the breakdown:

• The S&P 500 neared its recent local high again on Friday; bulls are on the run, but we may see some further uncertainty.
• We are maintaining our last Tuesday’s speculative long position (4,335 price level), as we expect an upward correction from the current levels (around +5% from the 4.335 level – futures contract).

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

Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,335 price level, with 4,180 as a stop-loss and 4,550 as an initial price target.

Thank you.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care