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 remained close to its new medium-term low yesterday, and this morning it is set to accelerate the sell-off following higher-than-expected inflation data. But will it break below the 3,500 level?
The S&P 500 index lost 0.33% on Wednesday, as it traded along the Tuesday’s new medium-term low of 3,568.45. Last week on Wednesday, the daily high was at 3,806.91 and stock prices reversed sharply lower after better-than-expected monthly jobs data release on Friday. There’s still a lot of fear concerning Central Banks’ tightening monetary policies, Russia-Ukraine war and an energy crisis.
This morning the S&P 500 will likely open 2.1% lower following higher-than-expected Consumer Price Index release. (+0.4% vs. the expected +0.2% m/m). So stocks will extend their medium-term downtrend and the index may reach the 3,500 level.
Futures Contract Breaks Lower
Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke below the recent lows this morning. So the resistance level is now at 3,550-3,600. On the other hand, the support level is at 3,500, among others.
In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):
Conclusion
Stocks will open much lower this morning, as investors react to the CPI number release. We may see a short-term bottom and an intraday rebound or a consolidation. However, there have been no confirmed positive signals so far.
Here’s the breakdown:
- S&P 500 will sell-off after the CPI data; it may reach a potential short-term bottom of around 3,500.
- 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
