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 rallied on Tuesday, as investors hunted for bargains following the recent declines. Is this a medium-term bottoming pattern?

The S&P 500 index gained 2.14% on Tuesday, Mar. 15, as it extended a volatile short-term consolidation. The market bounced from the 4,150 price level on Monday and yesterday it reached as high as 4,270. Recently the broad stock market index bounced off the 4,300 level. Last week on Tuesday it reached the local low of 4,157.87 and then we’ve seen a rebound to the 4,300 level.

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 1.0% higher following an overnight rally. The market will be waiting for the important FOMC Statement release, and we may see an increased volatility following the release that’s scheduled at 2:00 p.m.

The nearest important resistance level is now at around 4,300. On the other hand, the support level is at 4,150. The S&P 500 index continues to trade above the recently broken downward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract Extends Yesterday’s Rally

Let’s take a look at the hourly chart of the S&P 500 futures contract. Today it is trading close to the 4,300 level. The nearest important resistance level is at around 4,320-4,330, marked by the recent local high.

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 will likely extend its yesterday’s rally this morning following an overnight rally. The market may extend its volatile consolidation and we may see more uncertainty, as investors will be reacting on today’s FOMC Statement release.

Here’s the breakdown:

• The S&P 500 index will likely extend its rally, but there‘s an uncertainty concerning today’s FOMC release.
• 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