Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,335 price level, with 4,180 as a stop-loss and 4,550 as an initial price target.
Yesterday’s trading brought additional volatility to the stock market, but the S&P 500 index closed just slightly lower. So there’s more uncertainty following the recent sell-off.
The S&P 500 index lost 0.15% on Wednesday after the FOMC Statement release and an almost 150-point daily trading range. It failed to remain above the 4,400 level. On Monday there was an intraday rally from the new local low of 4,222.62. The market was 596 points or 12.4% below the Jan. 4 record high of 4,818.62. Investors reacted to further Russia-Ukraine tensions, among other factors.
This morning we’ve had much better than expected U.S. Advance GDP release. It supports a hawkish Monetary Policy from the Fed. We are now waiting for the important quarterly earnings release from Apple (after the close). So, we will likely see some more volatility.
Late December – early January consolidation along the 4,800 level was a topping pattern and the index retraced all of its December’s record-breaking advance. This morning it is expected to open 0.9% higher following an overnight sell-off.
The nearest important resistance level remains at 4,400-4,450, marked by the recent local highs. The resistance level is also at 4,500-4,550. On the other hand, the support level is at 4,300-4,350. The next support level is at 4,220-4,250. The S&P 500 continues to trade below a steep short-term downward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):
Futures Contract’s Volatile Consolidation
The S&P 500 futures contract continues to trade below the 4,400 price level. It also remains below the short-term downward trend line. For now, it looks like a consolidation within a downtrend.
We decided to open a speculative long position on Tuesday before the opening of the cash market (4,335 price level). It remains profitable despite volatility in the market. We are expecting a rebound from the current levels. (chart by courtesy of http://tradingview.com):
Conclusion
The S&P 500 index trades within a volatile consolidation following its Monday’s sell-off and an intraday rebound. Yesterday we’ve had an advance ahead of the FOMC release, but later in the day stocks sold off sharply again. This morning the index is expected to open 0.9% higher and we may see more short-term volatility.
The quarterly earnings releases (AAPL today after the session’s close, among others) remain a bullish factor for stocks, but there is still an uncertainty concerning Russia-Ukraine tensions,
Here’s the breakdown:
- The S&P 500 will likely open higher this morning and we may see some more fluctuations along the 4,400 level.
- We are maintaining our Tuesday’s speculative long position (4,335 price level).
- We are expecting an upward correction from the current levels (around +5% from the 4.335 level – futures contract).
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 4,335 price level, with 4,180 as a stop-loss and 4,550 as an initial price target.
Thank you.
Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
