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 failed to continue its uptrend – is this a topping pattern, or just pause?

The S&P 500 index lost 0.39% on Wednesday after getting closer to the important 4,600 level again. Stocks extended their short-term consolidation following mid-November rally. Last week on Friday the index bounced from 4,600 level. The daily high was at 4,599.39, so it was close to 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.

Stocks are expected to open 0.1% higher this morning. So the index will likely continue to fluctuate. It extends a short-term consolidation as we can see on the daily chart:

Futures Contract Remains Above 4,550

Let’s take a look at the hourly chart of the S&P 500 futures contract. On Friday it bounced from 4,600, and yesterday it was close to that resistance level again. On the other hand, the support level remains at 4,550.

Conclusion

The S&P 500 will likely extend its short-term consolidation this morning. The market will be waiting for tomorrow’s monthly jobs data release. It still looks like a relatively flat correction following mid-November rally.

There have been no confirmed negative signals so far. However, the index may see a downward correction at some point.

Here’s the breakdown:

• The S&P 500 extends its two-week-long consolidation.
• 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