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The stock market extends its week-long consolidation – is this still a potential bottoming pattern?

The S&P 500 index lost 0.40% on Tuesday, as it bounced from the 3,800 level once again. Last week on Thursday it reached new medium-term low of 3,764.49, before bouncing back above 3,800. Overall it extended a week-long consolidation following the decline from 4,100 level. Recently the S&P 500 has been negatively reacting to the December 14 FOMC interest rate hike, among other factors.

Today the S&P 500 will likely open 0.1% higher and we may see more uncertainty and a consolidation along the 3,800 level. In early December the S&P 500 index broke below its two-month-long upward trend line and recently it moved sharply lower after getting back to that line, as we can see on the daily chart:

Futures Contract – Still Close to 3,850

Let’s take a look at the hourly chart of the S&P 500 futures contract. This morning it is trading within a relatively narrow price range. The resistance level remains at 3,900-3,920, and on the other hand, the support level is at 3,800.

Conclusion

The S&P 500 index keeps extending its consolidation following mid-month sell-off. Today we may see a quite neutral opening of the trading session. There have been no confirmed positive signals so far. However, stocks may be forming a bottom here.

Here’s the breakdown:

• The S&P 500 index extended its short-term consolidation on Tuesday.
• There have been no confirmed positive signals so far, however, stocks may be forming a bottom.

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

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Available to premium subscribers only.

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Available to premium subscribers only.

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S&P 500 index bounced from 3,800 level – was it a reversal or just upward correction?

The S&P 500 index gained 1.49% yesterday, as it retraced some of the recent declines. It went closer to the 3,900 level again after bouncing from Tuesday’s new local low of 3,795.62. On Tuesday the markets were very volatile, but they didn’t extend their declines. Recently the S&P 500 reacted to last week’s Wednesday’s FOMC interest rate hike, among other factors.

Today stock prices are expected to open 0.8% lower after better-than-expected economic data releases (Final GDP, Unemployment Claims). In early December the S&P 500 index broke below its two-month-long upward trend line and it moved sharply lower after getting back to that line last week, as we can see on the daily chart:

Futures Contract Trades Below 3,900

Let’s take a look at the hourly chart of the S&P 500 futures contract. Yesterday it broke above the 3,900 level, but this morning it’s trading lower again. The support level remains at around 3,800.

Conclusion

The S&P 500 index will likely open 0.8% lower this morning. Stocks bounced on Wednesday, but today we may see some more uncertainty and a sideways trading action. There have been no confirmed positive signals so far. However, stocks may be forming a bottom here.

Here’s the breakdown:

• The S&P 500 index retraced some of its recent declines yesterday.
• Stocks will likely extend their short-term consolidation ahead of a holiday weekend.

Today's premium Stock Trading Alert includes details of our trading position. Interested in more exclusive updates? Join our premium Stock Trading Alerts newsletter and read all the details today.

Thank you.

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

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