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 were virtually flat on Thursday, as the market continued to fluctuate following its recent advances. Is this a topping pattern or just consolidation before another leg up?

The S&P 500 index gained 0.23% on Thursday following its Wednesday’s decline of 0.7% yesterday. The stock market went sideways following its last week’s rally and a breakout above the 4,300 level. The S&P 500 was extending its two-month-long uptrend from the medium-term low of 3,636.87 (June 17) despite ongoing worries about inflation, tightening Fed’s monetary policy, Russia-Ukraine conflict. For now, it looks like a relatively flat correction within an uptrend. However, this morning the index will likely open 0.8% lower and we may see some more clear profit-taking action on strengthening U.S. dollar, among other factors.

Futures Contract Remains Below 4,300

Let’s take a look at the hourly chart of the S&P 500 futures contract. This morning it’s trading along the 4,250 level. The resistance level remains at around 4,300-4,320.

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 will likely retrace some more of its recent advances this morning. There have been no confirmed negative signals and it looks like a correction within an uptrend. However, we may see a deeper retracement of the recent rally at some point.

Here’s the breakdown:

• The S&P 500 is expected to open lower this morning; it still looks like a correction within an uptrend.
• In our opinion, no positions are currently justified from the risk/reward point of view.

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