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 went sideways on Friday – will they resume the uptrend?
The S&P 500 index gained 0.06% on Friday as it remained close to its Wednesday’s new medium-term local high of 4,568.43. On Wednesday it was the highest since August 1. Recently the S&P 500 broke above the resistance level marked by the technically important September 21 daily gap down of around 4,376-4,401. Stocks rallied despite uncertainty about monetary policy, economic growth and geopolitics. The market resumed its rally from October 27 local low of 4,103.78 and on Wednesday it reached another important resistance level, marked by the August 2 daily gap down of 4,550.93-4,567.53.
Stocks will likely open 0.1% lower today, so the S&P 500 index will further extend a consolidation. It continues to trade close to its month-long upward trend line after going sideways and below that relatively steep line as we can see on the daily chart:
Futures Contract Trades Above 4,550
Let’s take a look at the hourly chart of the S&P 500 futures contract. Last week on Monday it broke above the recent trading range above 4,500 level and it got close to the resistance level of around 4,550-4,570, marked by previous local high, among others. The next resistance level is at 4,600. On the other hand, the support level remains at 4,500-4,520.
Conclusion
The S&P 500 is expected to extend a short-term consolidation this morning. There have been no confirmed negative signals so far. However, there are short-term overbought conditions that may lead to a correction at some point.
Here’s the breakdown:
- The S&P 500 reached new medium-term high last week.
- There may be a downward correction at some point.
- 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
