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.
Stocks sold off on Thursday and today they will open lower following worse-than-expected inflation data. So is the S&P 500 going straight to its May bottom?
The S&P 500 index lost 2.38% on Thursday after breaking below its two-week-long consolidation. The market went back into its May trading range and the index neared the 4,000 mark yesterday. On May 20 the medium-term low was at 3,810.32 - 1,008.3 points or 20.9% below the Jan. 4 record high of 4,818.62. So technically, the broad stock market entered a bear market territory. There’s still a lot of uncertainty and worries about inflation data, tightening Fed’s monetary policy and the Russia-Ukraine conflict. Today, the S&P 500 is expected to open 1.6% lower following higher than expected Consumer Price Index release (+1.0% vs. +0.7% m/m).
Futures Contract Breaks Lower
Let’s take a look at the hourly chart of the S&P 500 futures contract. It was trading within a consolidation above the 4,080 level and yesterday it broke lower. The likely support level is now at 3,900-3,950.
We will wait for an upward reversal pattern before entering a speculative long position, and it may happen early next week.
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 1.4% lower this morning. The market will likely extend its yesterday’s sell-off following worse-than-expected inflation data. However, we may see a local bottom this morning, as there’s a possibility of an intraday upward correction.
Investors will be waiting for June 15 FOMC’s interest rate decision.
Here’s the breakdown:
- The S&P 500 index will likely extend its yesterday’s sell-off after the CPI release.
- 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
