Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): No positions are currently justified from the risk/reward point of view.
The S&P 500 index extended its late-Friday rally yesterday. Stocks are back within their two-week long consolidation – is this a bottoming pattern?
The broad stock market index gained 1.86% on Monday, as it neared the 4,000 mark again. On Friday the S&P 500 fell to the new medium-term low of 3,810.32. It was 1,008.3 points or 20.9% below the Jan. 4 record high of 4,818.62. So technically, the broad stock market has entered a bear market territory. There’s still a lot of uncertainty and worries about inflation data, tightening Fed’s monetary policy and the Russia-Ukraine conflict. This morning the S&P 500 index is expected to open 1.0% lower after yesterday’s after-hours Snapchat Inc. (SNAP) profit warning release.
Futures Contract Remains Below the Downward Trend Line
Let’s take a look at the hourly chart of the S&P 500 futures contract. On Friday it went to the new medium-term low and it was trading close to the 3,800 level. The market keeps trading below its downward trend line.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
Stocks are expected to open lower this morning and they will likely retrace some of the recent rally from Friday’s lows. For now, it looks like a consolidation or a flat correction within a short-term uptrend. The markets will be waiting for today’s Fed Chair Powell speech at 12:20 p.m.
Here’s the breakdown:
- The S&P 500 index extended its short-term rally yesterday, but this morning it will likely open lower and retrace some of the advance.
- In our opinion, no positions are currently justified from the risk/reward point of view.
As always, we’ll keep you, our subscribers, well-informed.
Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): No positions are currently justified from the risk/reward point of view.
Thank you.
Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
