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).
Stock prices retraced their bounce on Friday – will the downtrend resume?
The S&P 500 index lost 0.27% on Friday after bouncing up to the local high of around 4,333. It retraced some of the recent declines, but then it went back below the 4,300 level. On Wednesday the broad stock market’s gauge was the lowest since early June - the daily low was at 4,238.63. Stocks continued their sell-off after the previous Wednesday’s FOMC monetary policy release. There’s still a lot of uncertainty about monetary policy and economic growth.
Stocks are expected to open 0.3% lower today. So the S&P 500 index will extend its Friday’s weakness despite an overnight futures advance. The index continues to fluctuate following the recent sell-off as we can see on the daily chart:
Futures Contract Remains Above 4,300
Let’s take a look at the hourly chart of the S&P 500 futures contract. This morning it’s trading closer to the Friday’s low. The support level remains at 4,280-4,300 and the resistance level is 4,380-4,400.
Conclusion
Stocks continue to trade within a week-long consolidation following their recent declines. Today the S&P 500 index may see more sideways trading action. Investors’ sentiment worsened following the September 20 FOMC Press Conference. Earlier it was improving as the pressure for further monetary policy tightening was somewhat easing.
Here’s the breakdown:
- Stocks extended their downtrend last week; the market may see more short-term uncertainty.
- 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
