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).

Stocks extended their rally yesterday, but will they continue higher?

The S&P 500 index gained 1.89% on Thursday as it broke above the 4,300 level following Wednesday’s FOMC Decision release, among other factors. The daily high was at 4,319.72. Recently the market kept selling-off on geopolitical uncertainty, strong U.S. dollar, among other factors. Last Friday’s low was at 4,103.78 and it was the lowest since May 12.

In early October stocks were rallying from their local lows along 4,220 level and on October 17 the index reached a local high of 4,394. There’s still a lot of uncertainty about monetary policy, economic growth and geopolitics.

Stocks will likely open 0.6% higher today as the market reacts to slightly lower than expected Nonfarm Payrolls release. It was at +150,000 vs. the expected +178,000. The S&P 500 gets closer to its mid-October consolidation as we can see on the daily chart:

Futures Contract Extends Its Rally

Let’s take a look at the hourly chart of the S&P 500 futures contract. On Friday it bounced from 4,120 level and this morning it’s trading above 4,350. The resistance level is now at 4,400 and the support level is at 4,280-4,300, marked by the broken resistance level.

Conclusion

The S&P 500 is expected to open higher today. The sentiment improved following slightly worse than expected jobs data. So the index may get closer to its mid-October consolidation. There may be an uncertainty in that area. The index may see a consolidation or a downward correction at some point.

Here’s the breakdown:

• The stock market has further extended a rally from its last Friday’s local low.
• The S&P 500 broke above 4,300 mark yesterday.
• 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