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.
On Tuesday, the stock market went sideways following last week’s rally. Is this a short-term topping pattern or just a flat correction within a new uptrend?
The S&P 500 index lost 0.63% on Tuesday after reaching new local high of around 4,168. The broad stock market went sideways following long holiday weekend, as investors took short-term profits off the table. On May 20 it went to the medium-term low of 3,810.32 and it was 1,008.3 points or 20.9% below the Jan. 4 record high of 4,818.62. So technically, the broad stock market entered a bear market territory. There’s still a lot of uncertainty and worries about inflation data, tightening Fed’s monetary policy and the Russia-Ukraine conflict. Today, the S&P 500 is expected to open 0.5% higher and we may see some more short-term fluctuations.
Futures Contract – Short-Term Consolidation
Let’s take a look at the hourly chart of the S&P 500 futures contract. It reached the 4,200 level on Monday, before retracing around 100 points from than short-term local high. For now, it looks like a correction within an uptrend.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
Stocks will likely open higher this morning, however, the S&P 500 index may remain within its short-term consolidation. There’s still a lot of uncertainty concerning inflation data, Fed’s tightening plans. Investors will be waiting for this Friday’s monthly jobs data release and the June 15 FOMC’s interest rate decision.
Here’s the breakdown:
- The S&P 500 index fluctuated following its last week’s rally yesterday – for now it looks like a relatively flat 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
