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 went sideways following their recent rally – will the market move before the long holiday weekend?
The S&P 500 index lost 0.20% on Tuesday as it fluctuated following its Monday’s advance of 0.7% and a breakout above the recent trading range along the 4,500 level. On Monday the index reached new local high of 4,557.11 and it was the highest since August 2.
Recently the S&P 500 broke above the resistance level marked by the technically important September 21 daily gap down of around 4,376-4,401. Stocks rallied despite uncertainty about monetary policy, economic growth and geopolitics. The market resumed its rally from October 27 local low of 4,103.78 and on Monday it got close to another important resistance level, marked by the August 2 daily gap down of 4,550.93-4,567.53.
Stocks will likely open 0.3% higher today. So the S&P 500 will continue to trade along its local highs. Yesterday’s earnings release from NVDA was better-than-expected but, the stock may extend a consolidation following its recent rally. The index continues to trade along its month-long upward trend line as we can see on the daily chart:
Futures Contract Remains Close to Local High
Let’s take a look at the hourly chart of the S&P 500 futures contract. On Monday it broke above the recent trading range and it got close to the resistance level of around 4,550-4,570, marked by previous local high, among others. The next resistance level is at 4,600. On the other hand, the support level remains at 4,500-4,520.
Conclusion
The S&P 500 index will likely extend its short-term consolidation this morning. There have been no confirmed negative signals so far. However, there are short-term overbought conditions that may lead to a correction at some point. Today the volatility may be lower ahead of the Thanksgiving Day and long holiday weekend.
Here’s the breakdown:
- The S&P 500 continues to trade above 4,500 level.
- 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
