Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,340 price level, with 4,020 as a stop-loss and 4,640 as an initial price target.

Stocks extended their volatile consolidation last week, as the Ukraine conflict kept dominating headlines. Is this a medium-term bottoming pattern?

The S&P 500 index lost 0.79% on Friday following its Thursday’s decline of 0.5%, as it retraced the recent advance to the 4,400 level. The market fell close to the 4,300 level again and it extended a consolidation after bouncing from the medium-term low of 4,114.65 in late February. The broad stock market index was 704 points or 14.6% below the January 4 record high of 4,818.62.

For now, it looks like an upward correction. However, it may also be a more meaningful reversal following a deep 15% correction from the early January record high. There’s still a lot of uncertainty concerning the ongoing Ukraine situation. This morning the S&P 500 index is expected to open 0.2% lower after an overnight rebound from the lower lows.

The nearest important resistance level is at 4,350-4,400 and the next resistance level is at 4,450-4,500. On the other hand, the support level is at 4,300, among others. The S&P 500 index remains above the recently broken downward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract – More Short-Term Fluctuations

Let’s take a look at the hourly chart of the S&P 500 futures contract. It continues to trade within a consolidation. The market remains close to the 4,300 level.

We are maintaining our long position from the 4,340 level, as we are still expecting an upward correction from the current levels (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index is expected to open 0.2% lower this mornings, but it was much lower just after the opening of the futures contract when global markets sold off on big daily gap up in oil price. We may see more short-term volatility.

Here’s the breakdown:

• The S&P 500 index continues to trade within a short-term consolidation following its recent rebound from the new medium-term low.
• We are maintaining our long position (opened on Feb. 22 at 4,340)
• We are expecting an upward correction from the current levels.

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 4,340 price level, with 4,020 as a stop-loss and 4,640 as an initial price target.

Thank you.

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