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 extended its sell-off yesterday – is a short-term bottom in?
The S&P 500 index lost 1.37% on Tuesday as it broke slightly below its last week’s local low of around 4,239. Yesterday’s daily low was at 4,216.45 and the market was the lowest since June 1. Recently the broad stock market index retraced some of the declines, but eventually it went below the 4,300 level again. Stocks continued selling off after the previous Wednesday’s FOMC monetary policy release. There’s still a lot of uncertainty about monetary policy and economic growth.
Stocks are expected to open 0.3% higher this morning. So the market may see another attempt at reversing the downtrend. The S&P 500 remains below 4,300 as we can see on the daily chart:
Futures Contract Bounces From New Low
Let’s take a look at the hourly chart of the S&P 500 futures contract. It reached new low of around 4,235 before bouncing back to the 4,280 level again. The support level is now at around 4,230-4,250 and the resistance level is now at 4,280-4,300, among others.
Conclusion
Stocks extended their downtrend yesterday on more fears about monetary policy tightening, rallying U.S. dollar. However, today the market will likely get back above its last week’s local low.
Investors’ sentiment worsened following the September 20 FOMC Press Conference. Earlier it was improving as the pressure for further monetary policy tightening was somewhat easing.
Here’s the breakdown:
- Stocks reached new lows yesterday, but there may be another rebound.
- 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
