Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,340 price level, with 4,440 as the stop-loss (take profit) and 4,740 as the price target.
The S&P 500 index retraced some of its recent advances yesterday. Is this a new short-term downtrend or just a downward correction?
The broad stock market index lost 1.57% on Thursday, as it broke below the 4,600 level. Investors took short-term profits off the table following the recent advances, and for now it looks like a short-term downward correction. This morning the index is expected to open 0.5% higher after generally as-expected monthly jobs data release.
The nearest important resistance level is at around 4,600-4,650, marked by the recent consolidation. On the other hand, the support level is at 4,450-4,500. The S&P 500 index broke below its short-term upward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):
Futures Contract Broke Below its Previous Highs
Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke below the upward trend line and it got back below its local highs from February. So is this a reversal? For now, it looks like a correction and we are still maintaining our profitable long position from the 4,340 level. (chart by courtesy of http://tradingview.com):
Conclusion
The S&P 500 index is expected to open 0.5% higher this morning, as it will likely retrace some of yesterday’s decline. We may see a short-term consolidation following the recent rally and a breakout above the 4,600 level.
Here’s the breakdown:
- The S&P 500 index retraced some of the recent rally, as it got back below the 4,600 level.
- We are maintaining our profitable long position (opened on Feb. 22 at 4,340).
- We are still expecting some upside from the current levels; however, it is time to get more cautious as there may be a bigger downward correction at some point.
As always, we’ll keep you, our subscribers, well-informed.
Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,340 price level, with 4,440 as the stop-loss (take profit) and 4,740 as the price target.
Thank you.
Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
