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.

Stocks extended their Wednesday’s rebound yesterday on weakening U.S. dollar, global stock markets’ rebound. Will the short-term uptrend continue today?

The S&P 500 index gained 0.66% on Thursday following its Wednesday’s advance of 1.8%, as it retraced some more of its recent declines. On Wednesday the market bounced from the 3,900 level and yesterday it got very close to its Monday’s local high of around 4,018.

In the first half of August the S&P 500 was extending its two-month-long uptrend from the medium-term low of 3,636.87 (June 17) despite ongoing worries about inflation, tightening Fed’s monetary policy, Russia-Ukraine conflict. On August 16 it reached the local high of 4,325.28.

The S&P 500 index will likely open 0.8% higher this morning, so it will continue its short-term advance. The market is breaking above its recent trading range.

Futures Contract Extends the Advance

Let’s take a look at the hourly chart of the S&P 500 futures contract. The contract broke above the 4,000 level and this morning it is further extending a short-term uptrend. The resistance level is at around 4,100-4,120.

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

Conclusion

The S&P 500 index is expected to open higher this morning. We may see some further short-term advances, however, it may still be just an upward correction following the recent declines.

Here’s the breakdown:

• The S&P 500 extended its short-term advance yesterday; yesterday’s breakout above the 4,000 level was a positive signal.
• 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