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 were volatile on Friday, as investors reacted to the monthly jobs data release. The market will likely extend a consolidation.

The S&P 500 index gained 0.52% on Friday following its Thursday’s sell-off of 2.4%. The broad stock market’s gauge retraced some of its recent rally, as it fell to the local low of 4,451.50. However, its Friday’s closing price was slightly above the 4,500 mark. So, the market found a short-term bottom on Friday after reversing from the Wednesday’s local high of 4,595.31. This morning the S&P 500 index is expected to open 0.2% higher. We will likely see a consolidation above the 4,500 level.

The nearest important resistance level is now at 4,540, market by the recent local highs. The resistance level is also at 4,600. On the other hand, the support level is at 4,400-4,450. The S&P 500 continues to trade below the November-January consolidation, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract Trades at the 4,500 Level

Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke above the short-term downward trend line a week ago before rallying up to around the 4,600 level. It is trading along the 4,500 level after backing from the Wednesday’s high of 4,586.

The market remains close to the resistance level of its previous local lows, but there have been no confirmed negative signals so far. So 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 0.2% higher this morning and we may see a consolidation along the 4,500 level. The market will likely remain within its relatively wide Friday’s daily trading range. The quarterly earnings season is mostly over now, and there is still an uncertainty concerning Russia-Ukraine tensions.

Here’s the breakdown:

• The S&P 500 index closed at the 4,500 mark on Friday; it will likely go sideways for some time.
• 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