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 fluctuated on Friday, as investors reacted to mixed monthly jobs data release. Stock prices retraced some of their Wednesday’s decline, but will that reversal last?

The S&P 500 index gained 1.36% on Friday, as it retraced its Thursday’s decline of 1.1% following mixed monthly jobs data release. On Wednesday it sold off by 2.5% after the FOMC interest rate hike. It broke below Monday’s-Tuesday’s trading range and a short-term support level of 3,850, and on Thursday it went to the daily low of around 3,700. On Friday the index bounced up to around the 3,800 level.

This morning the S&P 500 index is expected to open 0.2% higher, and we will likely see some more uncertainty following last week’s releases. The market will be waiting for the important Consumer Price Index release on Thursday.

Last week, the S&P 500 index broke below its upward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract Remains Below 3,800

Let’s take a look at the hourly chart of the S&P 500 futures contract. It bounced from the support level of 3,650-3,700. And the resistance level is now at around 3,800-3,850. The market trades along the previous local lows.

In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):

Conclusion

Stock prices are expected to open slightly higher this morning. They’ll likely see some more short-term uncertainty following last week’s important releases. Investors will be waiting for the consumer inflation number release on Thursday.

Here’s the breakdown:

• The S&P 500 index will likely extend its consolidation following last week’s retreat from the 3,900 level.
• There’s still a lot of fear concerning Fed’s monetary tightening amid better-than expected economic data releases.
• 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