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.

Stocks fluctuated following their Tuesday’s decline yesterday. But the market will likely open lower today – was the recent rally just an upward correction?

The S&P 500 index lost 0.07% on Wednesday, as it went sideways following Tuesday’s decline of 2%. Last week, the broad stock market retraced some of its recent declines after bouncing from the June 17 medium-term low of 3,636.87. On the previous Friday it was 1,181.75 points or 24.5% below its Jan. 4 record high of 4,818.62.

This morning the index is expected to open 1.0% lower and it will likely break below the 3,800 level. There’s still a lot of uncertainty and worries about inflation data, tightening Fed’s monetary policy, Russia-Ukraine conflict and the coming quarterly earnings releases season.

Futures Contract Broke Below 3,800 Level

Let’s take a look at the hourly chart of the S&P 500 futures contract. It extended a short-term downtrend this morning after breaking below the 3,800 level. The market remains within a consolidation following the early June declines.

In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):

Conclusion

The broad stock market’s gauge bounced following better-than-expected Core PCE Price Index release, but it’s still expected to open 1.0% lower this morning. For now, it looks like a further consolidation after the early June declines from the 4,100-4,200 level.

Here’s the breakdown:

• The S&P 500 index is expected to open 1.0% lower; we’ll likely see an intraday rebound and a further consolidation.
• 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