Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,340 price level, with 4,020 as a stop-loss and 4,640 as an initial price target.

Stocks remain within a volatile consolidation following the recent rebound. Will they resume the uptrend? Or was it just a dead cat bounce before another leg down?

The S&P 500 index lost 1.55% on Tuesday, as it fluctuated within the short-term trading range. Recently the sentiment improved following Thursday’s rebound, but there’s still a lot of uncertainty concerning the ongoing Russia-Ukraine conflict news. On Thursday, the broad stock market reached the low of 4,114.65 and it was 704 points or 14.6% below the January 4 record high of 4,818.62. And this week it went closer to the 4,400 level. For now, it looks like an upward correction. However, it may also be a more meaningful reversal following a deep 15% correction from the early January record high. This morning the S&P 500 index is expected to open 0.6% higher and we may see more volatility.

The nearest important resistance level remains at 4,400 and the next resistance level is at 4,450-4,500. On the other hand, the support level is at 4,300-4,350, among others. The S&P 500 index remains close to its downward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract Extends its Consolidation

Let’s take a look at the hourly chart of the S&P 500 futures contract. On Thursday it sold off after breaking below the 4,200 level. And since Friday it is trading along the 4,300 mark.

We are still expecting an upward correction from the current levels (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index will likely open higher this morning. We may see more short-term fluctuations and obviously, the markets will continue to react to the Russia-Ukraine conflict news.

Here’s the breakdown:

• The S&P 500 index bounced from the new low on Thursday after falling almost 15% from the early January record high.
• We are maintaining our speculative long position (opened on last Tuesday at 4,340)
• We are expecting an upward correction from the current levels.

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 4,020 as a stop-loss and 4,640 as an initial price target.

Thank you.

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