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 extended its downtrend once again yesterday, before closing slightly higher. So was it a short-term bottom?
The broad stock market index gained 0.25% on Tuesday after bouncing from the new medium-term low of 3,958.17. It was 860.45 points or 17.9% below the Jan. 4 record high of 4,818.62. Stocks were declining following fears of inflation, tightening monetary policy and the Russia-Ukraine war. This morning the S&P 500 index is expected to open 1.0% lower after worse-than-expected Consumer Price Index release.
Futures Contract is Below the 4,000 Level Again
Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading below the 4,000 level this morning. The market extends its short-term consolidation following the recent sell-off.
Yesterday, our speculative long position was closed at the stop-loss level of 4,010. We are still expecting an upward correction from the current levels. However, the trade was closed because of a breakdown below the pre-set stop-loss level and we decided to avoid risk of a bigger loss and wait for another trade opportunity. (chart by courtesy of http://tradingview.com):
Conclusion
The S&P 500 index will likely open 1.0% lower this morning. The market is reacting to higher than expected CPI data release (+0.3% vs. +0.2% m/m). For now, it looks like a consolidation or a flat correction within a downtrend.
Here’s the breakdown:
- The S&P 500 index extended its downtrend yesterday, but it closed higher; this morning it will likely get back and test the low again.
- Our long position was closed on Tuesday at the stop-loss level of 4,010.
- 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
