Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are currently justified from the risk/reward point of view.
The S&P 500 extended its consolidation yesterday – is this still a bottoming pattern?
The S&P 500 index lost 0.30% on Tuesday, as it retraced its Monday’s advance of 0.3%. Stocks extended their short-term consolidation and a relatively flat correction within a downtrend. On Friday the daily low was at 3,943.08, but the index bounced at the end of the day. There are still fears about monetary policy tightening following a series of better-than-expected economic data releases.
Stock prices will open 0.3% lower this morning, so the S&P 500 index may get closer to the Friday’s low. In early February the index broke below the upward trend line, as we can see on the daily chart:
Futures Contract Remains Below 4,000
Let’s take a look at the hourly chart of the S&P 500 futures contract. It’s trading within a consolidation, still close to its recent local lows. The resistance level is at 4,000-4,030, marked by the recent local highs. On the other hand, the support level is at 3,950. The next support level is at 3,900.
Conclusion
The S&P 500 index will likely further extend its consolidation this morning. The market may be forming a short-term bottom following a decline from mid-February local highs. However, there have been no confirmed positive signals so far. Investors will be waiting for the ISM Manufacturing PMI release at 10:00 a.m.
Here’s the breakdown:
- Stocks will likely open lower on an ongoing interest rates uncertainty.
- The S&P 500 may be forming a bottom before some more meaningful upward reversal.
- In my opinion, the short-term outlook is bullish and long positions are justified from the risk/reward point of view.
As always, we’ll keep you, our subscribers, well-informed.
Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long 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
