Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,340 price level, with 4,440 as the stop-loss (take profit) and 4,740 as the price target.

The S&P 500 index went back to the 4,500 level on Thursday, as it traded within a consolidation. Is this a short-term bottoming pattern?

The broad stock market’s gauge gained 0.43% on Thursday, as it fluctuated along the 4,500 level. There is still a lot of uncertainty concerning the Ukraine conflict and Fed’s monetary policy tightening plans. The S&P 500 index has been fluctuating within a consolidation after rallying from the March 14 local low of around 4,162 this week, but on Wednesday it broke below the recent lows. This morning stocks are expected to open slightly higher.

The nearest important resistance level is now at around 4,550-4,600, marked by the recent consolidation. On the other hand, the support level is at 4,450-4,500. The S&P 500 index remains close to the 4,500 level, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract Trades Above the 4,500 Level

Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke below the upward trend line last week and it got back below its local highs from February. So is this a reversal? For now it still looks like a correction and we are maintaining our profitable long position from the 4,340 level. However, the market got very close to our stop-loss (take-profit) level yesterday. (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index is expected to open 0.2% higher this morning following global stock markets’ bounce. It still looks like a correction within an uptrend, however, it may also be a topping pattern before some more meaningful downward reversal. Therefore, we’ve recently moved our take-profit/ exit level upwards.

Here’s the breakdown:

• The S&P 500 index will likely fluctuate along the 4,500 level for some time.
• We are maintaining our profitable long position (opened on Feb. 22 at 4,340).
• We are still expecting some upside from the current levels; however, it is time to get more cautious as there may be a bigger downward correction at some point.

As always, we’ll keep you, our subscribers, well-informed.

Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,340 price level, with 4,440 as the stop-loss (take profit) and 4,740 as the price target.

Thank you.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care