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 extended their rally on Thursday and the S&P 500 index broke above the 4,400 level. Will the short-term uptrend continue?

The S&P 500 index gained 1.23% on Thursday, following its Wednesday’s advance of 2.2%, as it broke slightly above the important 4,400 level. Stocks accelerated their run-up on Wednesday after breaking above the 4,300 level, as investors reacted to the FOMC interest rate decision release, and yesterday the broad stock market’s gauge was 250 points above its Monday’s local low of 4,161.72.

The market topped its early March local high yesterday, so we may see a profit-taking action. This morning the S&P 500 index is expected to open 0.6% lower following an overnight decline.

On Feb. 24 the index reached the local low of 4,114.65 and it was 704 points or 14.6% below the January 4 record high of 4,818.62 then. There’s still a lot of uncertainty concerning the ongoing Ukraine conflict.

The nearest important resistance level is now at around 4,500. On the other hand, the support level is at 4,300-4,350, marked by the recent consolidation. The S&P 500 index resumed its uptrend after breaking above the downward trend line in late February, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract Bounced from the 4,400 Level

Let’s take a look at the hourly chart of the S&P 500 futures contract. This morning it is trading slightly below the 4,400 level. The market will likely fluctuate along its previous local high for some time.

We are still maintaining our profitable long position from the 4,340 level, as we are expecting an upward correction from the current levels (chart by courtesy of http://tradingview.com):

Conclusion

Stocks extended their short-term uptrend on Thursday, as the S&P 500 index topped its early March local high above the 4,400 level. The S&P 500 index rallied 250 points from its Monday’s low, but will it further extend the uptrend? We may see some short-term profit-taking action, as the Ukraine war is still a negative factor for the markets.

The broad stock market broke above its week-long trading range this week. It may mean a more meaningful medium-term bottoming pattern.

Here’s the breakdown:

• The S&P 500 index rallied 250 points from its Monday’s local low – for now it looks like a medium-term bottoming pattern.
• We are maintaining our profitable long position (opened on Feb. 22 at 4,340).
• We are still 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