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 extended its uptrend on Wednesday, today it will likely go sideways.

The S&P 500 index gained 0.41% on Wednesday as it further extended a rally from its late October low. It reached new local high of 4,568.43 and it was the highest since August 1. Recently the S&P 500 broke above the resistance level marked by the technically important September 21 daily gap down of around 4,376-4,401. 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 and on Wednesday it reached to another important resistance level, marked by the August 2 daily gap down of 4,550.93-4,567.53.

Stocks are expected to open virtually flat today. So the S&P 500 will likely fluctuate along the 4,550 level. The market will close at 1:00 p.m. today and the activity may be low due to a long holiday weekend. S&P 500 continues to trade along its month-long upward trend line as we can see on the daily chart:

Futures Contract Trades Sideways

Let’s take a look at the hourly chart of the S&P 500 futures contract. On Monday it broke above the recent trading range above 4,500 level and it got close to the resistance level of around 4,550-4,570, marked by previous local high, among others. The next resistance level is at 4,600. On the other hand, the support level remains at 4,500-4,520.

Conclusion

Stocks will likely open virtually flat today and they may go sideways due to a long holiday weekend and shortened trading hours.

There have been no confirmed negative signals so far. However, there are short-term overbought conditions that may lead to a correction at some point.

Here’s the breakdown:

• The S&P 500 reached new medium-term high on Wednesday.
• There may be a 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