Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).
The S&P 500 went close to its July medium-term high, but will uptrend continue?
The broad stock market index gained 0.59% on Friday as it broke above the recent trading range. The daily high was at 4,599.39, so the S&P 500 got closer to its July 27 local high of 4,607.07. Investors’ sentiment remains bullish despite interest rates uncertainty, mixed economic data.
Recently the S&P 500 broke above the resistance level marked by the technically important August 2 daily gap down of 4,550.93-4,567.53. The market resumed its rally from October 27 local low of 4,103.78. On Friday it went to yet another important level marked by the mentioned July top.
The S&P 500 is expected to open 0.5% lower this morning. So there may be a correction following Friday’s advance. The nearest important resistance level is at 4,600 as we can see on the daily chart:
Futures Contract Extends Consolidation
Let’s take a look at the hourly chart of the S&P 500 futures contract. It is retracing some of the recent advance this morning, after bouncing from the 4,600 level. On the other hand, the support level is at 4,550, marked by the recent local lows.
Conclusion
Stock prices will likely retrace most of its Friday’s advance this morning. So the S&P 500 index may see some more uncertainty below the important 4,600 level.
There have been no confirmed negative signals so far. However, the market may see a downward correction at some point.
Here’s the breakdown:
- The S&P 500 reached almost its July high on Friday, but today it may retreat.
- There may be a downward correction at some point.
- In my opinion, the short-term outlook is still bullish and long positions are still justified from the risk/reward point of view.
As always, we’ll keep you, our subscribers, well-informed.
Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).
Thank you.
Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
