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 once again yesterday, as investors kept selling ahead of the next week’s Fed Rate Decision release. Will the S&P 500 reach a temporary bottom today?
The S&P 500 index lost 1.13% on Thursday after gaining just 0.3% the day before, as fears of monetary policy tightening took over once again. The new local low was at 3,888.28 and the closing price was slightly above the 3,900 level. Last week the market bounced from the 3,900 level and on Monday the daily high was at 4,119.28. It is still well below the August 16 local high of 4,325.28.
This morning the S&P 500 index will open much lower and it will break below the 3,900 level again. Then we may see a short-term consolidation. The market will be waiting for the next week’s Wednesday’s Fed Rate Decision release.
Futures Contract Break Below the Previous Low
Let’s take a look at the hourly chart of the S&P 500 futures contract. The market sold off below the 3,880-3,900 support level this morning. The next support level is at around 3,800.
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 is expected to open 1.3% lower this morning. The market will extend its downtrend after a Tuesday’s sharp downward reversal. There have been no confirmed positive signals so far. However, we may see a rebound at some point.
Here’s the breakdown:
- The S&P 500 index will likely extend its downtrend below the 3,900 level today; we may see a temporary bottom in the near term.
- In our opinion, the short-term outlook is neutral.
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
