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.

The S&P 500 index extended its downtrend on Monday, before bouncing and closing higher. So was it an upward reversal or just a quick upward correction before another leg down?

The broad stock market index gained 0.57% on Monday, as it bounced after the recent sell-off. On Thursday it lost 1.5% and on Friday it lost another 2.8% on renewed Fed’s monetary policy tightening fears. There’s also still a lot of uncertainty concerning the Ukraine conflict. This morning the S&P 500 index is expected to open 0.5% lower and we may see some more short-term uncertainty.

The nearest important resistance level is now at around 4,300 and the support level is at 4,175-4,200, marked by the previous consolidation. The S&P 500 index got back to its mid-March trading range, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract Remains Below the 4,300 Level

Let’s take a look at the hourly chart of the S&P 500 futures contract. Yesterday it fell slightly below the 4,200 level, before bouncing up to around 4,300 level. This morning it is retracing some of the rebound.

The market is technically oversold, but there have been no confirmed positive signals so far. (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index extended its downtrend yesterday, but it closed 0.6% higher. In the near term we will likely see a consolidation. Investors will wait for the important quarterly earnings releases this week. Today we will get the releases from GOOG, MSFT, tomorrow from FB (Meta), and on Thursday from AAPL and AMZN.

Here’s the breakdown:

• The S&P 500 index is expected to open lower today and we may see some more short-term uncertainty; for now it looks like a flat correction within a downtrend.
• 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