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).
S&P 500 extends its consolidation – which direction is next?
The S&P 500 index lost 0.06% on Tuesday, as stock prices continued to fluctuate following their mid-November rally. On Friday the index bounced from important 4,600 level. The daily high was at 4,599.39, so the S&P 500 went close to its July 27 medium-term high of 4,607.07. Investors’ sentiment is still bullish despite interest rates uncertainty, mixed economic data.
Recently the S&P 500 broke above the resistance level marked by the technically important August 2 daily gap down of 4,551-4,568. The market resumed its rally from October 27 local low of 4,103.78. On Friday it went to yet another important resistance level marked by the mentioned July top.
Today stocks will likely open 0.4% higher following lower-than-expected ADP Non-Farm Employment Change release. The S&P 500 extends its short-term consolidation as we can see on the daily chart:
Futures Contract Is Closer to 4,600
Let’s take a look at the hourly chart of the S&P 500 futures contract. On Friday it bounced from 4,600 resistance level and on Monday and Tuesday it traded along the support level of 4,550. Today it’s closer to breaking higher again.
Conclusion
The S&P 500 will likely extend its short-term fluctuations this morning, as it is expected to gain 0.4% at the opening of today’s trading session. It still looks like a relatively flat correction following mid-November rally.
There have been no confirmed negative signals so far. However, the market may see a downward correction at some point.
Here’s the breakdown:
- The S&P 500 remains below the important 4,600 resistance level.
- There may be a downward correction at some point.
- 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
