Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,225 price level, 4,010 as a stop-loss and 4,470 as an initial price target.

The S&P 500 index retraced its Wednesday’s rally yesterday, as market volatility shot through the roof. So will the downtrend continue?

The broad stock market index lost 3.56% on Thursday, after gaining 3% on Wednesday, as investors were selling stocks following Wednesday’s Fed’s interest rate hike decision. The market broke below the 4,200 level again. There’s still an uncertainty concerning weakening economy and the Russia-Ukraine conflict.

This morning the S&P 500 index is expected to open 0.1% lower after better-than-expected Nonfarm Payrolls release. So we will most likely see more fluctuations. The broad stock market extends its two-week long consolidation.

Futures Contract Reversed Sharply Lower Yesterday

Let’s take a look at the hourly chart of the S&P 500 futures contract. On Wednesday the market reached the 4,300 level, but yesterday it completely retraced the advance. Right now it’s trading within a previous consolidation along the 4,140 level.

We are maintaining our long position from the 4,225 level. We are still expecting an upward correction from the current levels. (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index may open 0.1% lower this morning following the monthly jobs data release. Stock prices may see some more short-term fluctuations. It still looks like a bottoming pattern following April decline.

Here’s the breakdown:

• The S&P 500 index retraced its Wednesday’s rally yesterday; stocks continue to fluctuate within a volatile consolidation.
• In our opinion a speculative long position (from the 4,225 price level) is justified from the risk/reward perspective - we are still expecting an upward correction from the current levels.

As always, we’ll keep you, our subscribers, well-informed.

Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,225 price level, 4,010 as a stop-loss and 4,470 as an initial price target.

Thank you.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care