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).
Stocks retraced more of their recent rally on Friday, but they may see more sideways trading.
The S&P 500 index lost 0.50% on Friday as it broke below the 4,350 level on increasing geopolitical risk, among other factors. Recently stocks were rallying from their local lows along 4,220 level and on Tuesday the index traded as high as 4,385. There’s still a lot of uncertainty about monetary policy, economic growth and geopolitics.
Stocks are expected to open 0.4% higher this morning. So the S&P 500 will extend its consolidation. It continues to trade below the Sept. 21 daily gap down of 4,375.70-4,401.38 as we can see on the daily chart:
Futures Contract Remains Above 4,350
Let’s take a look at the hourly chart of the S&P 500 futures contract. On Tuesday Oct. 3 it reached new low of around 4,235 before bouncing back above the 4,300 level. Last week the contract traded above the 4,400 level and today it’s bouncing from Friday’s low of around 4,340. The resistance level is at 4,420-4,440 and the support level remains at 4,350.
Conclusion
The S&P 500 will likely open higher today and it may see more sideways trading action below the 4,400 level. For now, it looks like a flat correction within a short-term uptrend. The market will be waiting for the coming quarterly earnings announcements this week, including releases from TSLA and NFLX on Wednesday.
Here’s the breakdown:
- Stocks will likely extend a consolidation as the market awaits quarterly earnings releases.
- The S&P 500 remains below its late September daily gap down; it acts as a resistance 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
