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 remain close to their local highs – is this a topping pattern?
The S&P 500 index gained 0.38% on Thursday, as it extended a short-term consolidation along the 4,550 level. On Wednesday the index reached new medium-term high of 4,587.64 and it was the highest since July 31. Investors’ sentiment remains bullish despite interest rates uncertainty, mixed economic data.
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 then it reached another important resistance level, marked by the August 2 daily gap down of 4,550.93-4,567.53. Yesterday it closed at that gap.
Stocks will likely open 0.2% lower this morning. So the S&P 500 index will continue sideways. The market remains close to its July highs as we can see on the daily chart:
Futures Contract Is Still Going Sideways
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 went close to the resistance level of around 4,570. The next resistance level is at 4,600. On the other hand, the support level remains at 4,540-4,550.
Conclusion
The S&P 500 index is expected to open slightly lower today, so the stock market will further extend its short-term consolidation following recent advances.
There have been no confirmed negative signals so far. However, the market may see a downward correction at some point.
Here’s the breakdown:
- The S&P 500 continues to trade along 4,550 level; it still looks like a flat correction within an uptrend.
- 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
