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 went closer to their recent lows yesterday – is this still a potential bottoming pattern?
The S&P 500 index lost 1.20% on Wednesday, as it broke below the 3,800 level 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.
The S&P 500 is expected to open 0.8% higher this morning, so we’ll likely 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 Remains Above 3,800
Let’s take a look at the hourly chart of the S&P 500 futures contract. Yesterday it came closer to its recent local lows again, but it remained above the 3,800 level. The resistance level is at 3,900-3,920, and on the other hand, the support level is at 3,800.
Conclusion
The S&P 500 index is expected to open higher this morning and it will likely get back above the 3,800 level. 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 went close to its recent local yesterday after breaking below 3,800 again.
- There have been no confirmed positive signals so far, however, stocks may be forming a bottom.
- 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
