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).
Stocks bounced from their Tuesday’s low yesterday - is a bottom in?
The S&P 500 index gained 0.81% on Wednesday as it bounced from Tuesday’s local low of 4,216.45. On Tuesday it was the lowest since June 1. Recently the broad stock market index retraced some of the declines, but eventually it went below the 4,300 level again. Stocks continued selling off after the previous Wednesday’s FOMC monetary policy release. There’s still a lot of uncertainty about monetary policy and economic growth.
Stocks will likely open 0.4% lower this morning, so there may be more sideways trading action following the recent sell-off. The S&P 500 remains below 4,300 as we can see on the daily chart:
Futures Contract Bounced From 4,300
Let’s take a look at the hourly chart of the S&P 500 futures contract. On Tuesday it reached new low of around 4,235 before bouncing back to the resistance level of 4,280-4,300. The support level remains at around 4,230-4,250.
Conclusion
The S&P 500 will likely extend its short-term fluctuations following a rebound from Tuesday’s local low. For now it looks like a consolidation. Recently the market was extending its downtrend on fears about monetary policy tightening, rallying U.S. dollar.
Investors’ sentiment worsened following the September 20 FOMC Press Conference. Earlier it was improving as the pressure for further monetary policy tightening was somewhat easing.
Here’s the breakdown:
- Stocks trade within a consolidation and a flat correction of the recent declines.
- The S&P 500 index remains below 4,300 level.
- 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
