Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,225 price level, 4,090 as a stop-loss and 4,470 as an initial price target.

The stock market retraced its Tuesday’s sell-off yesterday despite worse-than-expected GDP data release. Was it a reversal or just another upward correction?

The S&P 500 index gained 2.47% on Thursday, as it got back closer to the 4,300 level. The market retraced its Tuesday’s-Wednesday’s sell-off yesterday. There’s still a lot of uncertainty concerning the Fed’s monetary policy tightening fears and Ukraine conflict. Today the index is expected to open 0.9% lower following yesterday’s earnings releases from AAPL an AMZN. We may see some further short-term uncertainty.

Futures Contract Bounced from 4,300

Let’s take a look at the hourly chart of the S&P 500 futures contract. Yesterday the market went as high as 4,300, but this morning it is trading along the 4,250 level. For now, it looks like a consolidation following the recent sell-off from the 4,500 level.

The market was technically oversold and there were some positive trend exhaustion signals, therefore we decided to open a speculative long position yesterday before the opening of the cash market (4,225 level) with the stop-loss level of 4,090 and the initial target profit level of 4,470. We are expecting an upward correction from the current levels. (chart by courtesy of http://tradingview.com):

Conclusion

The S&P 500 index is expected to open 0.9% lower this morning. Stocks will likely retrace some of their yesterday’s advance. There have been no confirmed negative signals and so far it looks like a correction or a consolidation.

Here’s the breakdown:

• The S&P 500 index bounced from below the 4,200 level yesterday; the market may be forming a bottoming pattern.
• In our opinion a speculative long position (from the 4,225 price level) is justified from the risk/reward perspective - we are expecting an upward correction from the current levels.

As always, we’ll keep you, our subscribers, well-informed.

Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): long positions with entry at 4,225 price level, 4,090 as a stop-loss and 4,470 as an initial price target.

Thank you.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care