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.
Stocks sharply reversed their short-term uptrend yesterday on declining retail sector profits, inflation fears. Will the market break below the recent lows?
The S&P 500 index lost 4.04% on Wednesday, after gaining 2.0% on Tuesday, as it almost completely retraced its recent advance from the new medium-term low of 3,858.87. On Thursday a week ago it was 959.8 points or 19.9% below the Jan. 4 record high of 4,818.62. Then the market rallied to its Tuesday’s local high of around 4,091. This morning it is expected to open 0.9% lower, so we may see an attempt at breaking below the mentioned last Thursday’s low.
Futures Contract Trades Along the Recent Low
Let’s take a look at the hourly chart of the S&P 500 futures contract. Yesterday it broke below the support level of around 3,980-4,000 and today it is trading along the medium-term lows. There have been no confirmed positive signals so far. However, we can see some short-term oversold conditions.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
The S&P 500 index will likely open 0.9% lower this morning, as global stock markets sold off overnight. The market may see an intraday bounce, however, there have been no confirmed positive signals so far.
Here’s the breakdown:
- The S&P 500 index retraced its recent rally; it is almost 20% below the January all-time high again.
- 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
