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 fluctuate following last week’s rally – is this a topping pattern?

The S&P 500 index gained 0.13% on Friday as it continued to fluctuate along the 4,500 level. The stock market is still trading within a consolidation and a flat correction of the uptrend. On Wednesday the index reached new medium-term high of 4,521.17 and it was the highest since September 1.

Recently the index 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.

The S&P 500 index will likely open 0.1% higher today. So the market may see more uncertainty and sideways trading action. The index is trading along a month-long upward trend line as we can see on the daily chart:

Futures Contract Goes Sideways

Let’s take a look at the hourly chart of the S&P 500 futures contract. Last week on Tuesday it broke above the 4,500 level. Since then the market has been fluctuating. The resistance level remains at around 4,550-4,570, marked by the previous local high. On the other hand, the support level is at 4,480-4,500.

Conclusion

Stocks are expected to open virtually flat this morning. The S&P 500 index is still trading sideways following last Tuesday’s rally caused by lower-than-expected CPI release. 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. Investors will be waiting for the important quarterly earnings release from NVDA tomorrow.

Here’s the breakdown:

• The S&P 500 is still trading along 4,500 level.
• 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