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.

Stock prices went even lower on Friday, as monetary policy fears kept dominating headlines. Will the market extend its declines or is some temporary bottom near?

The S&P 500 index lost 0.72% on Friday, after bouncing from the new local low of 3,837.08. It closed above the 3,8,70 level, but it was still well below the 3,900 mark. In the previous week the market bounced from the 3,900 level and last week on Monday the high was at 4,119.28.

This morning the S&P 500 index will likely open lower again. The futures contract trades 0.9% below its Friday’s closing price. So the broad stock market may re-test the local low again. However, it may see an intraday consolidation, and possibly a rebound.

Futures Contract Trades Along its Local Low

Let’s take a look at the hourly chart of the S&P 500 futures contract. It went below the Friday’s low this morning, but we may see an attempt at bouncing from the support level of around 3,850.

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 likely open lower again today. The market is still frightened by the Fed’s monetary tightening plans and their Wednesday’s Rate Decision announcement. There have been no confirmed positive signals so far. However, we may see a rebound at some point.

Here’s the breakdown:

• The S&P 500 will open lower again; we may see an intraday rebound 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