Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,225 price level, 4,010 as a stop-loss and 4,470 as an initial price target.

The S&P 500 index extended its Monday’s rebound yesterday, but it failed to get back above the 4,200 level. So was it just an upward correction?

The broad stock market index gained 0.48% on Tuesday following its Monday’s gain of 0.6%, as it retraced more of the recent sell-off. On Monday it fell to the new yearly low of 4,062.51. The market reacted to the quarterly earnings, poor economic data releases, Fed’s monetary policy tightening plans and Ukraine conflict.

Today we will get the FOMC interest rate decision release at 2:00 p.m. and it will certainly lead to an increased market volatility. We may see a consolidation along 4,150-4,200 levels. The market is expected to open 0.2% higher this morning.

Futures Contract – Closer to the 4,200 Level Again

Let’s take a look at the hourly chart of the S&P 500 futures contract. On Monday it fell below the 4,100 level, but it quickly retraced the decline and yesterday it traded just below the 4,200 level. For now, it looks like an upward correction. However, the market may be reversing its downtrend.

We are maintaining our last Thursday’s speculative long position from the 4,225 level. We are still expecting an upward correction from the current levels. (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index is expected to open 0.2% higher this morning following worse than expected ADP Non-Farm Employment Change release (+247,000 vs. the expected +382,000). There’s a lot of uncertainty concerning today’s Fed’s monetary policy release. Friday’s and Monday’s panic may suggest that at least a short-term bottom may be in sight.

Here’s the breakdown:

• The S&P 500 index retraced more of its recent declines yesterday; we’ll likely see an increased volatility following today’s Fed’s Rate Decision release at 2:00 p.m.
• On Monday we moved our Thursday’s long position’s stop-loss level to 4,010 (one time only).
• In our opinion a speculative long position (from the 4,225 price level) is justified from the risk/reward perspective - we are still expecting an upward correction from the current levels.

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 4,225 price level, 4,010 as a stop-loss and 4,470 as an initial price target.

Thank you.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care