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).
S&P 500 slightly extended its advance yesterday – is this a short-term topping pattern?
The S&P 500 index gained 0.16% on Wednesday as it basically fluctuated following its Tuesday’s rally of 1.9%. On Tuesday the market reacted to lower-than-expected Consumer Price Index release and yesterday it reached new local high of 4,521.17. It was the highest since September 1. Recently the index broke above the resistance level marked by the technically important September 21 daily gap down of around 4,376-4,401. Stocks rallied despite uncertainty about monetary policy, economic growth and geopolitics. The market resumed its rally from October 27 local low of 4,103.78.
Stocks are expected to open virtually flat today. So the S&P 500 will likely extend a consolidation. It continues to trade above 4,500 level as we can see on the daily chart:
Futures Contract Remains Above 4,500
Let’s take a look at the hourly chart of the S&P 500 futures contract. Recently the market has accelerated its rally and on Tuesday it broke above the 4,500 level. The resistance level is now at around 4,550-4,570, marked by the previous local high. On the other hand, the support level is at 4,480-4,500.
Conclusion
The S&P 500 index will likely go sideways this morning. There have been no confirmed negative signals so far. However, there are short-term overbought conditions that may lead to consolidation or a correction at some point.
Here’s the breakdown:
- The S&P 500 trades above 4,500 level.
- There may be a consolidation or 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
