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.
Stock prices suffered another big decline yesterday following its last week’s downward reversal. Is this a new downtrend or still just a correction of the uptrend?
The S&P 500 index lost 2.14% on Monday following its Friday’s decline of 1.3%, as investors reacted to strengthening U.S. dollar, global stock markets’ sell-off. In the first half of the month the S&P 500 was extending its two-month-long uptrend from the medium-term low of 3,636.87 (June 17) despite ongoing worries about inflation, tightening Fed’s monetary policy, Russia-Ukraine conflict. On Tuesday, August 16 it reached the local high of 4,325.28, and yesterday, the daily low was at 4,129.86. This morning the S&P 500 index is expected to open virtually flat. We will likely see an increased volatility after PMI numbers release at 9:45 a.m. Stock prices may fluctuate following their recent sell-off.
Futures Contract is at Previous Lows
Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke below the upward trend line yesterday and it went closer to the 4,100 level. The support level remains at 4,080-4,100, and the resistance level remains at 4,200.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
Stocks will likely open virtually flat this morning and we may see an attempt at retracing some of their recent sell-off. The market will await the important PMI numbers releases this morning. The S&P 500 index may enter a short-term consolidation and a flat correction of the decline.
Here’s the breakdown:
- The S&P 500 will likely fluctuate following the recent declines; there have been no confirmed positive signals so far.
- 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
