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 index sold off after the Fed’s Rate Decision release yesterday. There may be a rebound today, but bulls are not out of the woods yet.

The broad stock market index lost 1.71% on Wednesday, following its Tuesday’s decline of 1.1%, as investors reacted to the Fed Chief Powell’s Conference concerning the U.S. monetary policy update. The S&P 500 reached new medium-term low of 3,789.49 yesterday and it was almost 330 points below the last Monday’s local high of 4,119.28.

The S&P 500 index will likely open 0.4% higher this morning and we may see a short-term consolidation or a rebound following the recent sell-off.

Futures Contract Trades Along 3,800

Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke below the recent trading range yesterday. The resistance level is now at 3,850-3,900, marked by the previous support level. There have been no confirmed positive signals so far, however there are some short–term oversold conditions that may lead to a bounce.

In our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):

Conclusion

Stock prices are expected to bounce at the opening of today’s trading session. However, it may be just another upward correction. The market may fluctuate within a short-term consolidation.

Here’s the breakdown:

• The S&P 500 dipped below its recent trading range yesterday following the Fed’s release; short-term oversold conditions point to bounce or 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