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 reacted positively to the important FOMC release yesterday and they had a rally. But the market is expected to go sideways this morning. So is this still just a consolidation?
The S&P 500 index gained 2.62% on Wednesday following the Fed’s Rate Decision release. The broad stock market’s gauge went the highest since June 9 and it closed above the 4,000 level. So it extended an over month-long uptrend from the medium-term low of 3,636.87 (June 17), despite the ongoing worries about inflation, tightening Fed’s monetary policy, and Russia-Ukraine conflict. This morning the S&P 500 is expected to open virtually flat after worse-than expected Advance GDP number release (-0.9% vs. +0.4% expected q/q).
Futures Contract Trades Above 4,000
Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke above the 4,000 level yesterday on the Fed’s release. The next resistance level is at 4,080, marked by the previous local lows.
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 open at its yesterday’s closing price. Investors will now wait for the earnings releases from AAPL and AMZN – today after the session’s close. The market may extend its short-term uptrend, however, it may see profit-taking action at some point.
Here’s the breakdown:
- The S&P 500 rallied on Wednesday after the Fed’s Rate Decision release; this morning it will likely trade within a consolidation.
- 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
