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 went down on Friday, as the S&P 500 index bounced down from the 4,000 level. Will the uptrend continue ahead of quarterly earnings releases, Wednesday’s Fed release?

The S&P 500 index lost 0.93% on Friday, after bouncing down from the new local high of 4,012.44. The broad stock market slightly extended its short-term uptrend before retracing the Thursday’s advance of 1.0%. On Friday the S&P 500 went the highest since June 10 on economic data, corporate earnings releases. Stocks kept advancing despite the ongoing worries about inflation, tightening Fed’s monetary policy, and Russia-Ukraine conflict. But then we’ve witnessed an intraday downward correction. This morning the S&P 500 is expected to open 0.4% higher and we may see some further uncertainty and a consolidation below the resistance level of 4,000.

Futures Contract – Short-Term Consolidation

Let’s take a look at the hourly chart of the S&P 500 futures contract. It continues to trade below the 4,000 level following its recent advances. For now, it looks like a relatively flat correction within an uptrend.

In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):

Conclusion

This morning the S&P 500 index is expected to open 0.4% higher, as it may retrace some of its Friday’s decline. There have been no confirmed negative signals so far. Investors will wait for series of quarterly earnings releases – tomorrow we will get reports from GOOG, MSFT, on Wednesday META, and on Thursday AAPL, AMZN, among others. Investors will also wait for the important Wednesday’s release from the FOMC and for Thursday’s Advance GDP number release.

Here’s the breakdown:

• The S&P 500 will likely extend its short-term consolidation below the important 4,000 level; investors will wait for series of important data releases this week.
• 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