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.

The S&P 500 index went to the 4,700 level yesterday but it was virtually flat at close. Will stocks extend their short-term uptrend today?

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The S&P 500 index was unchanged on Monday, as investors took short-term profits off the table following the recent advances. It got close to the 4,700 level before reversing lower and going back to the Friday’s closing price. On Wednesday it fell to the local low of 4,630.86 and it was almost 88 points or 1.86% below the previous week’s Friday’s record high of 4,718.50.

The early November rally was not broad-based and it was driven by a handful of tech stocks like MSFT, NVDA, TSLA. The market seemed overbought in the short-term and it traded within a topping pattern. Then the index retraced some of that advance, as it fell the mentioned 88 points from the record high.

The nearest important support level remains at 4,630-4,650 and the next support level is at 4,600. On the other hand, the resistance level is at 4,700-4,720. The S&P 500 broke below its steep short-term upward trend line recently, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract – Short-Term Consolidation

Let’s take a look at the hourly chart of the S&P 500 futures contract. Last week the market broke below a week-long upward trend line. On Friday it retraced most of the decline. For now, it looks like a short-term consolidation. 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 0.1% higher this morning. We may see another attempt at breaking above the 4,700 level. However, the market will likely continue to fluctuate along that level following today’s higher than expected Retail Sales number release.

Here’s the breakdown:

• The S&P 500 bounced from its last week’s local low and it got back to the 4,700 level yesterday. For now, it looks like a short-term consolidation.
• Still no positions are 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