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 went lower following yesterday’s FOMC Rate Decision release, and today they’ll likely extend the decline. Is this a downtrend?

The S&P 500 index lost 0.61% on Wednesday, as it retraced its Tuesday’s advance of 0.7%. The market reacted to the FOMC interest rate hike, but it remained close to the 4,000 level. It continues to trade within an over month-long consolidation.

This morning the S&P 500 will likely open 1.4% lower, so it is expected to extend its recent declines. Stock prices will get closer to their local lows but they may remain within the mentioned month-long consolidation.

Last week the index broke below its two-month-long upward trend line, and on Tuesday it came back to that line again, as we can see on the daily chart:

Futures Contract Got Back to the 4,000 Level

Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading along the 4,000 level this morning. The resistance level remains at around 4,100.

Conclusion

The S&P 500 index is expected to open much lower following yesterday’s Fed’s interest rate hike, weaker-than-expected economic data releases. The stock market continues to trade within an over month-long consolidation, but today it may get closer to the support level.

Here’s the breakdown:

• S&P 500 index bounced from the 4,100 level again, and the Fed’s release led to more selling in stocks.
• Stock prices may get close to their previous lows today.
• 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