Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): short positions with an entry at 4,435, with 4,520 as a stop-loss and 4,200 as a price target.

The S&P 500 index rallied to a new record high yesterday after retracing all of the recent declines. Is the market able to break above 4,500 soon?

It gained 0.85% on Monday and reached a new record high of 4,489.88. It got very close to the 4,500 price level. The nearest important support level is now at 4,450. On the other hand, the resistance level is at 4,480-4,500, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

We Maintain Our Short Position

Let’s take a look at the hourly chart of the S&P 500 futures contract. We opened a short position on Thursday, August 12 at the level of 4,435. The position was profitable before the recent run-up. We still think that a speculative short position is justified from the risk/reward perspective. (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index retraced all of its recent declines yesterday, and it reached a new record high level of around 4,490. The market will most likely turn down again and extend its weeks-long consolidation. Therefore, we think that the short position is justified from the risk/reward perspective.

Here’s the breakdown:

• The market reached a new record high as it got closer to the 4,500 mark.
• Our speculative short position is still justified from the risk/reward perspective.
• We are expecting a 5% or bigger correction from the new record high.

As always, we’ll keep you, our subscribers, well-informed.

Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): short positions with an entry at 4,435, with 4,520 as a stop-loss and 4,200 as a price target.

Thank you.

Paul Rejczak,

Stock Trading Strategist

Sunshine Profits: Effective Investments through Diligence and Care