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.
Stocks sold off following the FOMC Monetary Policy release yesterday. Will they extend that sell-off today?
The S&P 500 index lost 2.50% on Wednesday, as investors reacted to hawkish comments by the Fed Chair Powell. The index broke below its Monday’s-Tuesday’s trading range and a short-term support level of 3,850, and it went to the daily low of around 3,760. On Tuesday it extended an uptrend from the October 13 new medium-term low of 3,491.58. The market kept bouncing from the 3,900 level. This morning the S&P 500 index is expected to open 0.9% lower, but we’ll likely see a consolidation or a bounce later in the day. There’s still a lot of fear about tightening monetary policy amid better-than-expected economic data releases. The market will be waiting for tomorrow’s monthly jobs data release.
Futures Contract Broke Below the Trend Line
Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke below the upward trend line yesterday. The resistance level remains at 3,900-3,950, and the support level is now at 3,650-3,700.
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 extend its yesterday’s decline this morning. There’s still a lot of fear about tightening monetary policy, and stocks reversed their short-term uptrend yesterday. Today we’ll likely see their consolidation or bounce. However, there have been no confirmed positive signals so far.
Here’s the breakdown:
- The S&P 500 index reversed its short-term uptrend on hawkish Fed yesterday.
- Stock prices may extend their losses, but a short-term rebound may be coming later in the day.
- 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
