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 prices went down yesterday again, but overall the market remained within its Friday’s trading range. And it’s still at June lows. So is this a bottoming pattern?

The S&P 500 index lost 1.03% on Monday, as it retraced its Friday’s late-session rebound and came back to the new medium-term low of 3,644.76 – 3 points below its low from Friday. Today the broad stock market will likely open 1.5% higher, so it may see a rebound following the recent declines. Is it finally forming a short-term bottom? For now, it looks like a consolidation.

Futures Contract – Short-Term Consolidation

Let’s take a look at the hourly chart of the S&P 500 futures contract. It continues to fluctuate within a consolidation following the recent sell-off. The support level remains 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 is expected to open much higher this morning and we may see an attempt at retracing some of the recent declines. There’s still a lot of uncertainty concerning monetary policy tightening, but a clearly bearish sentiment (just check it at the AAII webpage: https://www.aaii.com/sentimentsurvey ) may point to a short-term bottom in the near-term.

Here’s the breakdown:

• S&P 500 will likely retrace its yesterday’s decline at the opening of the trading session; for now, it looks like a consolidation.
• 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