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.
Stock prices backed off yesterday, as investors took short-term profits off the table following Friday’s rally. Was it just a quick downward correction?
The S&P 500 index lost 0.75% on Monday, after gaining 2.5% on Friday, as it bounced from the resistance level of 3,900. Last week it extended an uptrend from the October 13 new medium-term low of 3,491.58. The market went up to the resistance level of 3,900 and yesterday it retraced some of the advance. The S&P 500 index will likely open 1.0% higher this morning, so we may see an attempt at breaking higher. Investors will be waiting for the important FOMC Monetary Policy release tomorrow and monthly jobs data on Friday.
Futures Contract Trades Above 3,900
Let’s take a look at the hourly chart of the S&P 500 futures contract. It’s trading above the 3,900 level this morning. The resistance level is at 3,900-3,950, and the nearest important support level is at around 3,840-3,850. The market remains above a two-week-long upward trend line.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
Stocks are expected to open higher this morning. The short-term sentiment remains bullish ahead of tomorrow’s FOMC release. Despite the interest rates uncertainty, there have been no confirmed negative signals so far.
Here’s the breakdown:
- The S&P 500 index remains close to the 3,900 resistance level; we may see another attempt at breaking higher.
- In our opinion, the short-term outlook is neutral.
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
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