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.

Stock prices extended their short-term downtrend yesterday, as investors were still selling after the Wednesday’s interest rate hike. Today we’ll likely see a consolidation following mixed jobs data.

The S&P 500 index lost 1.06% on Thursday, following its Wednesday’s decline of 2.5%, as it extended a short-term downtrend on strengthening U.S. dollar, interest rates fears. On Wednesday the index broke below Monday’s-Tuesday’s trading range and a short-term support level of 3,850, and yesterday it went to the daily low of around 3,700. On Tuesday it extended an uptrend from the October 13 new medium-term low of 3,491.58. The market kept bouncing from the 3,900 level.

This morning the S&P 500 index is expected to open 0.4% higher following a mixed monthly jobs data release. We will likely see a consolidation or an upward correction of the recent declines. There’s still a lot of fear about tightening monetary policy amid better-than-expected economic data releases.

Futures Contract - Short-Term Volatility

Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading above the support level of 3,650-3,700. For now, it looks like a consolidation within a short-term downtrend. However, we may see attempts at reversing that downtrend.

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 is expected to open higher this morning after a mixed jobs data release. There’s still a lot of fear about tightening monetary policy, and on Tuesday stocks reversed their short-term uptrend. Today we’ll likely see consolidation or a bounce. There have been no confirmed positive signals so far.

Here’s the breakdown:

• Stock prices extended their declines yesterday, but today we may see a rebound or a consolidation.
• There’s still a lot of fear concerning Fed’s monetary tightening.
• In our opinion, the short-term outlook is neutral.

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