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 broke below their recent lows – will they accelerate the downtrend?
The S&P 500 index lost 0.85% on Thursday as it broke below the 4,300 level on rising international tensions, interest rates fears. Earlier in the week the market bounced from 4,400 level. Yesterday it traded as low as 4,270.
Recently stocks were rallying from their local lows along 4,220 level and on Tuesday the index reached a local high of 4,394. There’s still a lot of uncertainty about monetary policy, economic growth and geopolitics.
Stocks are expected to open 0.4% lower today. So the S&P 500 will likely extend its yesterday’s decline this morning. Recently it failed to get back above the Sept. 21 daily gap down of 4,375.70-4,401.38 as we can see on the daily chart:
Futures Contract Trades Below 4,300
Let’s take a look at the hourly chart of the S&P 500 futures contract. Today it’s trading below the 4,300 level. The resistance level is now at 4,300-4,320, marked by the previous support level. On the other hand, the support level is now at around 4,250.
Conclusion
The S&P 500 is expected to open lower today so the broad stock market will extend its short-term downtrend. It may get back to the early October local lows on geopolitical tensions, interest rates uncertainty. The market will be waiting for more quarterly earnings announcements next week.
Here’s the breakdown:
- Stocks will likely extend their short-term downtrend this morning..
- The S&P 500 bounced from its late September daily gap down; it is still acting as a resistance level.
- 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
