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 recent sell-off yesterday. The market remains frightened by today’s FOMC Statement release – is it trading within a short-term bottoming pattern?

The S&P 500 index lost 0.38% on Tuesday, following its Monday’s sell-off of 3.9% and Thursday’s-Friday’s sell-off of more than 5%. Yesterday the index was at the new medium-term low of 3,705.68 – 1112.9 points or 23.1% below its Jan. 4 record high of 4,818.62.

There’s still a lot of uncertainty and worries about inflation data, tightening Fed’s monetary policy and the Russia-Ukraine conflict. The market will be waiting for today’s FOMC Rate Decision announcement. We will likely see an increased volatility. Following that release. This morning the S&P 500 index is expected to open 1.0% higher, and it may see a rebound following the recent declines.

Futures Contract – Short-Term Consolidation

Let’s take a look at the hourly chart of the S&P 500 futures contract. It was trading within a consolidation above the 4,080 level last week, and on Thursday it broke lower. The market reached new medium-term lows and since Monday it has been trading within a consolidation along the 3,750 level.

We will wait for an upward reversal pattern before entering a speculative long position.

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

Conclusion

The S&P 500 index will likely open 1.0% higher this morning and we may see an intraday consolidation leading to the FOMC’s interest rate decision release at 2:00 p.m.

Here’s the breakdown:

• The S&P 500 index is expected to open higher, but there’ll be an increased volatility following the FOMC Monetary Policy release later in the day.
• 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