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 continued its downtrend on Friday – is it close to a temporary bottom already?

The broad stock market index lost 1.11% on Friday following its Thursday’s sell-off of 2.5%, as it broke below the 3,900 level. The market continued to react to the last Wednesday’s FOMC interest rate hike. On Friday it went the lowest since November 10.

This morning the S&P 500 is expected to open 0.1% higher. It may see a short-term consolidation below their previous local lows and a month-long consolidation. Last week the index broke below its two-month-long upward trend line, as we can see on the daily chart:

Futures Contract – Consolidation Following the Decline

Let’s take a look at the hourly chart of the S&P 500 futures contract. It‘s trading within a short-term consolidation below the resistance level of 3,900. On the other hand, the support level is at 3,800-3,850, among others.

Conclusion

Today, the S&P 500 index will likely trade within a short-term consolidation following its last week’s sell-off. There have been no confirmed positive signals so far. However, we may see attempts at bouncing or reversing the downtrend.

Here’s the breakdown:

• Stock prices extended their sell-off on Friday, and today they are expected to trade sideways.
• 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