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 extended their short-term advance yesterday. Will the uptrend continue despite worse-than-expected economic data releases? Or is this still just an upward correction?

The S&P 500 index gained 0.59% on Wednesday, as it extended its short-term uptrend, It got the highest since mid-June. The broad stock market index also broke above the resistance level of 3,900-3,950. But the market is still below the 4,000 mark. Stocks went up despite ongoing worries about inflation, tightening Fed’s monetary policy, Russia-Ukraine conflict and the quarterly earnings releases season. This morning the S&P 500 is expected to open 0.2% higher and we may see some profit-taking action and a short-term consolidation.

Futures Contract Remains Close to a Local High

Let’s take a look at the hourly chart of the S&P 500 futures contract. It’s trading slightly above the previous local highs along the 3,920-3,950 level. The resistance level remains at 4,000, among others.

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. We’ve had a release from the ECB (interest rate hike), but the markets remain relatively calm. There have been no confirmed negative signals so far and for now it looks like a flat correction or a consolidation. Investors will wait for the next week’s quarterly earnings releases.

Here’s the breakdown:

• The S&P 500 will likely extend its short-term uptrend today, but we may see another intraday downward correction at some point.
• 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