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.
The S&P 500 index will likely break above its short-term local highs this morning. Is this still just a consolidation following mid-June sell-off or a new uptrend?
The broad stock market index gained 0.95% on Thursday, as it got close to the recent highs again. The market retraced its last week’s Wednesday’s-Friday’s decline reaching new medium-term low of 3,636.87. On Friday it was 1,181.75 points or 24.5% below its Jan. 4 record high of 4,818.62. And on Tuesday it bounced up to around 3,780. Yesterday the index closed slightly above the 3,800 level and this morning it’s expected to open 0.8% higher. There’s still a lot of uncertainty and worries about inflation data, tightening Fed’s monetary policy and the Russia-Ukraine conflict.
Futures Contract Broke Above Short-Term Trend Line
Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke above its recent downward trend line along the 3,780 level. This morning it is approaching a breakout above the local high of around 3,840. The market is still below its mid-May local lows.
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 is expected to open 0.8% higher following global stock markets’ advance. For now, it looks like an upward correction within a downtrend and we may see some further uncertainty and a consolidation.
Here’s the breakdown:
- The S&P 500 index will likely open higher this morning; it’s still not clear whether it’s an upward reversal or just a move within a consolidation.
- 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
