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 bounced from the 4,500 level on Thursday, as it retraced most of its Wednesday’s sell-off. Was it a reversal or just another upward correction?
For in-depth technical analysis of various stocks and a recap of today's Stock Trading Alert we encourage you to watch today's video.
The broad stock market index gained 1.42% on Thursday after opening slightly lower and bouncing from the new local low of 4,504.73. The index fell the lowest since the October 19 and it went below its early September local high of around 4,546. Overall, it lost 5.04% from the Nov. 22 record high of 4,743.83. But Thursday’s trading session was bullish and stocks were gaining. Was it an upward reversal? This morning stocks are expected to open 0.3% higher after the mixed monthly jobs data release. For now, it looks like a correction within a downtrend. We may see a short-term consolidation following the recent declines.
The nearest important support level is now at 4,500. On the other hand, the resistance level is at 4,580-4,600, marked by the recent local lows. The S&P 500 remains below its short-term downward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):
Nasdaq 100 Remains Close to the 16,000 Level
Let’s take a look at the Nasdaq 100 chart. The technology index remains relatively stronger than the broad stock market, as it is still trading above the early September local highs of around 15,700. However, the technology index gained just 0.7% yesterday, as we can see on the daily chart:
Apple Remains Volatile After Reaching New Record High
Let’s take a look at biggest stock in the S&P 500 index: AAPL. Apple accelerated its uptrend once again and on Wednesday it reached the new record high of $170.30. Apple’s market cap reached almost 2.8 trillion dollars! But on Thursday, the stock was 7.3% below its Wednesday’s high, before bouncing back above the $160 level. So the stock price remains very volatile and we may see a medium-term topping pattern.
Short Position Is Still Profitable
Let’s take a look at the hourly chart of the S&P 500 futures contract. The market trades within a short-term downtrend after breaking below the upward trend line in late November. It looked like a topping pattern following an advance from the early October lows.
We still think that a speculative short position (opened on Tuesday, Nov. 23 - 4,678 price level) is justified from the risk/reward perspective. We decided to move the stop-loss level from 4,820 to 4,720 and the profit target level from 4,450 to 4,350 yesterday. (chart by courtesy of http://tradingview.com):
Conclusion
The S&P 500 index is expected to open 0.3% higher this morning after the mixed monthly jobs data release. We may see a consolidation and some more volatility following the recent declines. There have been no confirmed positive signals so far.
Here’s the breakdown:
- The S&P 500 slightly extended its short-term downtrend yesterday before bouncing from the 4,500 level.
- A speculative short position is still justified from the risk/reward perspective.
- We are expecting an over 5% correction.
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
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