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 went higher before reversing and closing virtually flat on Monday. So the market extended a consolidation – is this a short-term topping pattern?

The S&P 500 index lost 0.12% on Monday after reaching new local high of 4,186.62. It extended a consolidation above the 4,100 level. Recently the broad stock market’s gauge has been extending an almost two-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, Russia-Ukraine conflict. This morning the S&P 500 will is expected to open 0.2% lower and we may see some further uncertainty ahead of tomorrow’s important CPI number release.

Futures Contract – More Fluctuations

Let’s take a look at the hourly chart of the S&P 500 futures contract. It went closer to the 4,200 level yesterday, before reversing lower and going back below the 4,150 level again. For now, it looks like a consolidation and a relatively flat correction within an uptrend. However, it may also be a topping pattern before some bigger profit-taking action.

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 slightly lower this morning and we may see further fluctuations along the 4,150 level. The broad stock market keeps going sideways following the late July advances. There have been no confirmed negative signals so far.

Here’s the breakdown:

• Stock prices will open slightly lower this morning; investors will await the important Consumer Inflation number release tomorrow.
• 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