Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): short positions with entry at 4,678 price level, with 4,720 as a stop-loss and 4,350 as a price target.

The S&P 500 index is at the 4,700 level again following Monday’s-Tuesday’s rally of around 200 points. Are new record highs inevitable?

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The S&P 500 index gained 0.31% yesterday, as it extended its recent rally. The market closed slightly above the 4,700 mark and it retraced almost all of its late Nov. – early Dec. decline. On Friday the index fell to the local low of 4,495.12 and it was 5.24% below the Nov. 22 record high of 4,743.83. This morning the index is expected to open 0.4% lower and we may see some more short-term profit taking action following the rally from last week’s low.

The nearest important support level remains at 4,700-4,750, marked by the record high, among others. On the other hand, the support level is now at around 4,610-4,630, marked by Tuesday’s daily gap up of 4,612.60-4,631.97. The S&P 500 is now at its previous consolidation, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

We are maintaining our short position

Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke above the downward trend line on Monday and it rallied on Tuesday. The market is now close to our stop-loss level of 4,720. We’ve opened a short position on Tuesday, Nov. 23 at the 4,678 price level. (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index will likely continue to fluctuate following a relatively large short-term rally from Friday’s low. There have been no confirmed short-term negative signals so far and we may see an attempt at breaking above the 4,700 level.

Here’s the breakdown:

• The S&P 500 is expected to fluctuate and we may see some short-term profit taking action this morning.
• We are maintaining our short position from the 4,678 level.

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

Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): short positions with entry at 4,678 price level, with 4,720 as a stop-loss and 4,350 as a price target.

Thank you.

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