Trading position (short-term, our opinion; S&P 500 futures contract): In my opinion, the short-term outlook is bullish and long positions are still justified from the risk/reward point of view (since Feb. 27).

The S&P 500 extended its decline – is it still just a correction?

The S&P 500 index lost 0.53% on Friday as it broke below the 4,500 level. The market reversed its intraday rebound and it went the lowest since early July. The daily low was at 4,474.55 so the index fell 132.5 points or 2.9% from the July 27 new medium-term high of 4,607.07. On Friday the broad stock market reacted to Thursday’s earnings releases from AAPL and AMZN and the monthly jobs data.

There is still a lot of uncertainty concerning monetary policy, some technology/AI stocks’ valuation concerns, but the investors’ sentiment remains bullish.

Stocks are expected to open 0.3% higher today. The S&P 500 may extend its consolidation along to the 4,500 level. The index broke below its two-month-long upward trend line last week as we can see on the daily chart:

Futures Contract Remains Above 4,500

Let’s take a look at the hourly chart of the S&P 500 futures contract. It’s still fluctuating along the 4,500 level. Friday’s daily low was at around 4,494. The support level is at 4,500 and the resistance level is at 4,540-4,550, among others.

Conclusion

Stocks prices are expected to bounce following their Friday’s retreat. The S&P 500 index will likely extend a short-term consolidation following the recent declines. It still looks like a correction within an uptrend.

Here’s the breakdown:

• The S&P 500 remains close to the 4,500 level after bouncing down from the recent high of around 4,607.
• In my opinion, the short-term outlook is still bullish and long positions are still 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 still justified from the risk/reward point of view (since Feb. 27).

Thank you.

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