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).
Stocks extend their consolidation, jobs data isn’t moving the market.
The S&P 500 index gained 0.80% on Thursday as it went closer to its recent local highs despite Wednesday’s bearish price action. Stocks continue their short-term consolidation following mid-November rally. Last week on Friday the index bounced from 4,600 level. The daily high was at 4,599.39, so it was close to July 27 medium-term high of 4,607.07. Investors’ sentiment is still bullish despite interest rates uncertainty, mixed economic data.
Recently the S&P 500 broke above the resistance level marked by the technically important August 2 daily gap down of 4,551-4,568. The market resumed its rally from October 27 local low of 4,103.78. On Friday it went to yet another important resistance level marked by the mentioned July top.
Stocks will likely open 0.1% lower this morning. So the market isn’t reacting that much to better-than-expected monthly jobs data release. The S&P 500 extends a short-term consolidation as we can see on the daily chart:
Futures Contract Trades Above 4,600 (New Series)
Let’s take a look at the hourly chart of the S&P 500 futures contract. The new series is trading above 4,600 level this morning. The support level is at 4,580-4,600, among others.
Conclusion
Despite Nonfarm Payrolls and the Unemployment Rate release, stock prices will likely continue sideways this morning. It still looks like a relatively flat correction following mid-November rally.
There have been no confirmed negative signals so far. However, the index may see a downward correction at some point.
Here’s the breakdown:
- The S&P 500 continues to trade below the important 4,600 level.
- 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
