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 uptrend yesterday, but they were flat at the close of the trading session. Was it a downward reversal or just another quick correction?
The S&P 500 index lost 0.07% on Thursday after breaking slightly above the 4,250 level early in the day. The broad stock market was the highest since early May yesterday and the index reached new local high at 4,257.91. Recently it broke above its short-term trading range following lower-than-expected inflation numbers releases. The S&P 500 extended 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. This morning the S&P 500 will likely open 0.5% higher. We may see a short-term consolidation above the 4,200 level.
Futures Contract Consolidates Along New Local High
Let’s take a look at the hourly chart of the S&P 500 futures contract. The market reached new short- and medium-term high yesterday after breaking above the 4,200 level. The nearest important support level is now at 4,200, and resistance level is at 4,250, among others.
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 will likely open higher this morning. It may fluctuate following its recent advances. There’s more uncertainty, as investors take profits off the table amid short-term overbought. However, there have been no confirmed negative signals so far.
Here’s the breakdown:
- Stocks will likely open higher, but they may extend a short-term consolidation; for now, it looks like another relatively flat correction within an uptrend.
- 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
