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 remained below the 3,900 level on Monday, as the U.S. dollar strength kept investors’ sentiment low. Is this a short-term topping pattern or just pause within an uptrend?

The broad stock market index lost 1.15% on Monday, after bouncing from the 3,900-3,950 level once again. Last week the S&P 500 retraced almost all of its previous decline despite rallying U.S. dollar and commodities’ volatility. But early this week sellers took the initiative again. There’s still a lot of uncertainty and worries about inflation data, tightening Fed’s monetary policy, Russia-Ukraine conflict and the coming quarterly earnings releases season.

This morning the S&P 500 index is expected to open 0.4% lower, however, it was trading a bit lower overnight. We may see an intraday bounce and another attempt at breaking above the 3,900 level.

Futures Contract Trades Along Recent Highs

Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading along the 3,850 level after bouncing from the resistance level of 3,900-3,950. For now, it looks like a further consolidation following the previous week’s bounce.

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 0.4% lower this morning. It may see some further short-term uncertainty, as investors will be waiting for the coming quarterly earnings releases, Wednesday’s CPI and Friday’s Retail Sales releases.

Here’s the breakdown:

• The S&P 500 index extended its consolidation because of the strengthening U.S. dollar, inflation uncertainty; we may see some further price fluctuations.
• 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