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).

Stock prices reached new lows – is the market getting close to a short-term bottom?

The S&P 500 index lost 1.43% on Wednesday as it retraced Monday’s-Tuesday’s rebound on geopolitical uncertainty, stronger U.S. dollar, among other factors. Yesterday the index reached new medium-term low of 4,181.42 and it was the lowest since June 1. However, it reached only slightly below its Monday’s local low of 4,189. In early last week the market bounced from the 4,400 resistance level.

Recently stocks were rallying from their local lows along 4,220 level and in the previous week on Tuesday the index reached a local high of 4,394. There’s still a lot of uncertainty about monetary policy, economic growth and geopolitics.

Stocks are expected to open 0.3% lower today, following better-than-expected Advance GDP number release. The S&P 500 continues to trade along the 4,200 level as we can see on the daily chart:

Futures Contract Trades Below 4,200

Let’s take a look at the hourly chart of the S&P 500 futures contract. This morning it’s trading below the 4,200 level following yesterday’s quarterly earnings releases, economic data. The resistance level is now at 4,200-4,220, marked by the previous support level and the support level is at 4,150-4,170.

Conclusion

Stocks will open slightly lower following an overnight rebound. So the S&P 500 index may remain relatively close to the important 4,200 level. Investors continue to react to quarterly earnings releases, among other factors. Today after the session’s close we will get releases from AMZN, INTC, among others. The index may see a rebound or an upward correction at some point.

Here’s the breakdown:

• Stock prices will likely extend their fluctuations; it still looks like consolidation within a downtrend.
• The S&P 500 broke below the important 4,200 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