Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).
S&P 500 remained above 4,400 yesterday, and today it’s poised to open much higher.
The S&P 500 index lost 0.8% on Monday as it fluctuated following its Friday’s advance of 1.6%. Yesterday it reached new local high of 4,421.76, before closing virtually flat. It remained above the resistance level marked by the technically important September 21 daily gap down of around 4,376-4,401. Recently stocks rallied despite uncertainty about monetary policy, economic growth and geopolitics. The market resumed its rally from October 27 local low of 4,103.78.
Stocks are expected to open 1.4% higher following slightly lower than expected Consumer Price Index release. It was at 0.0% vs. the expected +0.1% m/m. Yesterday the S&P 500 was the highest since late September as we can see on the daily chart:
Futures Contract Breaks Higher
Let’s take a look at the hourly chart of the S&P 500 futures contract. It’s breaking above a short-term consolidation following the CPI release. The resistance level is now at 4,500, and the support level is at 4,440, marked by the recent resistance level.
Conclusion
The S&P 500 index will likely extend its uptrend this morning on lower-than-expected consumer inflation number. So it may get closer to the 4,500 level. There have been no confirmed negative signals so far. However, there are short-term overbought conditions that may lead to consolidation or a correction at some point.
Here’s the breakdown:
- The S&P 500 will likely further extend its short-term uptrend following the CPI release.
- There may be a consolidation or downward correction at some point.
- In my opinion, the short-term outlook is still bullish and long positions are still justified from the risk/reward point of view.
As always, we’ll keep you, our subscribers, well-informed.
Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).
Thank you.
Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
