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 slightly extended its advance yesterday, as inflation fears eased following CPI number announcement. Is this still just a rebound?
The S&P 500 index gained 0.28% on Wednesday, Jan. 12, as it extended its short-term uptrend following Tuesday’s breakout above the 4,700 level. The broad stock market’s gauge bounced from the Monday’s local low of 4,582.24 and it retraced more than half of the recent decline. The broad stock market continues to trade within an over two-month long consolidation. Late December – early January consolidation along the 4,800 level was a topping pattern and the index fell to its previous trading range, but yesterday it broke above the November-December local highs again.
The nearest important resistance level is at around 4,750, marked by the yesterday’s daily high, among others. On the other hand, the support level is now at 4,700. The support level is also at 4,650. The S&P 500 is trading just below the late December – early January consolidation, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):
Futures Contract Trades Along the Previous Local Highs
Let’s take a look at the hourly chart of the S&P 500 futures contract. The market retraced most of its recent decline and it is currently trading along the local highs from November and December. 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 virtually flat this morning after mixed PPI and Unemployment Claims releases. The broad stock market will likely extend its short-term fluctuations following the rebound from Monday’s low.
Here’s the breakdown:
- The S&P 500 will likely fluctuate below its topping pattern from the late Dec. – early Jan.
- 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
