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.
The S&P 500 index fluctuated after its Tuesday’s sell-off yesterday. Is this a short-term bottom or just consolidation before another leg down?
The broad stock market index gained 0.34% on Wednesday after selling off 4.3% the day before. Yesterday stocks went basically sideways within a flat correction. The new local low was at 3,912.18. Last week the market bounced from the 3,900 level and on Monday the daily high was at 4,119.28. It is still well below the August 16 local high of 4,325.28.
This morning the S&P 500 index will likely open virtually flat following series of mixed economic data releases. We may see some more uncertainty after the Tuesday’s rout. The market will be waiting for the next week’s Wednesday’s Fed Rate Decision release.
Futures Contract Going Sideways
Let’s take a look at the hourly chart of the S&P 500 futures contract. The market sold off below the 4,000 level on Tuesday, and since then it has been going sideways and within a relatively narrow trading range. The support level remains at 3,880-3,900, marked by the previous local low.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
Stocks are expected to remain within a short-term consolidation at the opening of today’s trading session. So, the S&P 500 will continue to fluctuate below the 4,000 level. For now, it looks like a consolidation following Tuesday’s sell-off. There have been no confirmed positive signals so far. However, we may see a rebound at some point.
Here’s the breakdown:
- The S&P 500 index trades within a short-term consolidation; for now, it looks like a flat correction.
- In our opinion, the short-term outlook is neutral.
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
