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 stock market sold off on Friday as the S&P 500 index lost a staggering 3.6%. So will the market break below its late February panic low?

The S&P 500 index lost 3.63% on Friday, following its Thursday’s gain of 2.5%. The market reacted to the quarterly earnings, poor economic data releases, Fed’s monetary policy tightening plans and Ukraine conflict. The index was the lowest since late February and it closed the lowest since last year’s May. This morning the S&P 500 index is expected to open 0.2% lower and we may see an attempt at breaking below this year’s low of 4,114.65 (Feb. 24).

Futures Contract is at New Short-Term Low

Let’s take a look at the hourly chart of the S&P 500 futures contract. On Friday the market fell below its recent local low of around 4,135. This morning it’s trading closer to the 4,100 level. We can see some technical oversold conditions.

On Thursday before the opening of the cash market we decided to open a speculative long position (4,225 level) with the stop-loss level of 4,090 and the initial target profit level of 4,470.

This morning, due to an extraordinary volatility we decided to lower the stop-loss to the 4,010 level. There’s a potential support level of 4,050, marked by the local lows from May of 2021. (We will move the stop-loss level only one time). We are still expecting an upward correction from the current levels. (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index is expected to open 0.2% lower this morning. There have been no confirmed positive signals so far. However, we may see a rebound or upward reversal at some point. Friday’s panic may suggest that at least a short-term bottom may be in sight.

Here’s the breakdown:

• The S&P 500 index sold off by almost 4% on Friday, as it completely retraced its Thursday’s rebound.
• We are moving our Thursday’s long position’s stop-loss level to 4,010 (one time only).
• 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