Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,340 price level, with 4,020 as a stop-loss and 4,640 as an initial price target.

Stocks broke above the consolidation following yesterday’s Fed’s interest rate increase. Will this short-term uptrend continue?

The S&P 500 index gained 2.24% on Wednesday, Mar. 16 following its Tuesday’s gain of 2.1%. The market broke above the recent local highs along the 4,300 level and it rallied despite the Fed’s interest rate hike. Yesterday’s daily high was at 4,358.90, so the index gained almost 200 points from its Monday’s local low of 4,161.72. It looks like a medium-term bottoming pattern and, however we may see a short-term profit taking action at some point.

On Feb. 24 the index reached the local low of 4,114.65 and it was 704 points or 14.6% below the January 4 record high of 4,818.62 then. There’s still a lot of uncertainty concerning the ongoing Ukraine conflict. This morning the S&P 500 index is expected to open 0.4% lower and the market may fluctuate following its two-session rally.

The nearest important resistance level is now at around 4,400. On the other hand, the support level is at 4,300, marked by the recent local highs. The S&P 500 index continues to trade within a volatile consolidation following late February sell-off, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract Gets Closer to Previous High

Let’s take a look at the hourly chart of the S&P 500 futures contract. This morning it is trading close to the late February – early March consolidation below the 4,400 level. We may see a short-term uncertainty here.

We are still maintaining our long position from the 4,340 level, as we are expecting an upward correction from the current levels (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index is expected to open 0.4% lower this morning. We may see some short-term profit-taking action following 200-point rally from Monday’s local low. The broad stock market broke above its week-long trading range. It may mean a more meaningful medium-term bottoming pattern.

Here’s the breakdown:

• The S&P 500 index will likely retrace some of the 200-point rally from its Monday’s low.
• We are maintaining our long position (opened on Feb. 22 at 4,340).
• We are still expecting an upward correction from the current levels.

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 4,340 price level, with 4,020 as a stop-loss and 4,640 as an initial price target.

Thank you.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care