Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).
The S&P 500 broke above its recent trading range – will the uptrend continue?
The S&P 500 index gained 1.19% on Wednesday after breaking above the recent local highs on economic data, quarterly earnings releases and a potential debt ceiling deal. Early in the week stock prices went sideways following last Wednesday’s CPI and Thursday’s PPI releases. On Thursday May 4 the S&P 500 fell to the local low of 4,048.28, but it quickly got back to around 4,150. Since then it has been fluctuating within a relatively narrow trading range and yesterday it broke higher.
Stocks are expected to open 0.1% lower this morning so the S&P 500 will likely fluctuate following its yesterday’s advance. In early May the index bounced from the important 4,200 resistance level as we can see on the daily chart:
Futures Contract Trades Along 4,170
Let’s take a look at the hourly chart of the S&P 500 futures contract. It retraced most of its early May decline, but the nearest important resistance level remains at around 4,160-4,180, On the other hand, the support level is now at 4,150, among others.
Conclusion
The S&P 500 index will likely open virtually flat this morning. It may see some profit-taking action following yesterday’s advance. It still looks like a consolidation after March-April advances.
Here’s the breakdown:
- The S&P 500 broke above its recent trading range yesterday.
- The market extends a few-week-long consolidation.
- In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view.
As always, we’ll keep you, our subscribers, well-informed.
Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).
Thank you.
Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
