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.

Stock prices backed off on Wednesday, as the S&P 500 bounced from the 3,750 level. Today we may see more uncertainty and a consolidation ahead of the earnings releases.

The S&P 500 index lost 0.67% on Wednesday after gaining 1.14% on Tuesday, as investors took short-term profits off the table. Last week the market fluctuated on mixed economic data releases, fear concerning Central Banks’ tightening monetary policies, Russia-Ukraine war and an energy crisis. On Thursday the index bounced from the new medium-term low of 3,491.58, and on Tuesday it went as high as 3,762.79. This morning stocks will open slightly lower. The index will likely extend a short-term consolidation.

Futures Contract Trades Close to 3,700

Let’s take a look at the hourly chart of the S&P 500 futures contract. On Tuesday it went closer to the resistance level of 3,800. It may see some more short-term uncertainty here.

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 today. There’s still a lot of uncertainty and the stock market keeps extending its consolidation following September’s decline. The market is trading sideways since late September.

Here’s the breakdown:

• Stocks extend their short-term consolidation; investors will be waiting for the crucial next week’s quarterly corporate earnings releases.
• In our opinion, the short-term outlook is neutral.

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