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 went higher despite the ongoing inflation fears. But will the uptrend continue?
The broad stock market index gained 2.02% on Tuesday, as it got closer to the 4,100 level. On Thursday it fell to the new medium-term low of 3,858.87 - 959.8 points or 19.9% below the Jan. 4 record high of 4,818.62 and on Monday it fluctuated following Friday’s rally of 2.4%. So, the market bounced from a psychological 20% correction mark. Recently stocks continued to decline following fears of inflation, tightening monetary policy and the Russia-Ukraine war. This morning the S&P 500 index is expected to open 1.0% lower and we’ll likely see a profit-taking action.
The nearest important resistance level is now at around 4,100, marked by the recent support level. On the other hand, the support level is at around 3,950-4,000. The S&P 500 index broke above its downward trend line recently, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):
Futures Contract – Consolidation at Previous Low
Let’s take a look at the hourly chart of the S&P 500 futures contract. The support level remains at 3,980-4,000, and the resistance level is at 4,080-4,100.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
This morning stocks are expected to open much lower following global stock markets’ weakness. So we will likely see a downward correction and a profit taking action following the recent advances. For now, it looks like a correction within a short-term uptrend.
Here’s the breakdown:
- The S&P 500 index retraced more of its recent declines yesterday, but it is expected to open lower this morning.
- 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
