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 fell to new medium-term lows yesterday, as inflation and recession fears dominated news headlines. Will the downtrend continue despite clear oversold conditions?
The S&P 500 index lost 1.65% on Wednesday, as it broke below the 4,000 level. The market fell to the new medium-term low of 3,928.82. It was 889.8 points or 18.5% 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 0.6% lower after global stock markets’ sell-off and mixed economic data releases.
Futures Contract is Close to the 3,900 Level
Let’s take a look at the hourly chart of the S&P 500 futures contract. This morning it is trading along the 3,900 level. We can see some short-term oversold conditions, however, there have been no confirmed positive signals so far.
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 0.6% lower this morning. So the broad stock market will further extend its downtrend. However, we may be getting closer to a short-term bottom and an upward correction.
Here’s the breakdown:
- The S&P 500 index broke below the 4,000 level yesterday and it reached the new medium-term low of 3,928.82.
- 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
