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 lower again on Thursday, as it retraced more of the recent advances. It still looks like a consolidation and a potential medium-term bottoming pattern.

The broad stock market index lost 0.88% on Thursday, as it went below the 3,800 level. However, it bounced from the daily low of around 3,739, before closing at around 3,785. Last week, the broad stock market retraced some of its recent declines after bouncing from the June 17 medium-term low of 3,636.87. On the previous Friday it was 1,181.75 points or 24.5% below its Jan. 4 record high of 4,818.62.

This morning the S&P 500 index will likely open 0.2% lower and we may see some further short-term fluctuations along the 3,800 level. There’s still a lot of uncertainty and worries about inflation data, tightening Fed’s monetary policy, Russia-Ukraine conflict and the coming quarterly earnings releases season.

Futures Contract – Short-Term Consolidation

Let’s take a look at the hourly chart of the S&P 500 futures contract. It slightly extended its short-term downtrend after breaking below the 3,800 level. The market remains within a consolidation following the early June declines.

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 will likely open 0.2% lower this morning. We may see more fluctuations following the recent retreat from local highs of around 3,950. It still looks like a further consolidation after the early June declines from the 4,100-4,200 level.

Here’s the breakdown:

• The S&P 500 index will likely open slightly lower this morning; the market may extend a short-term consolidation.
• 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