The S&P 500 index lost 0.9% on Wednesday as it backed off from new medium-term high of 4,587.64. The market extended its uptrend, but it closed near its daily low. S&P 500 was the highest since July 31 yesterday.
Recently the S&P 500 broke above the resistance level marked by the technically important September 21 daily gap down of around 4,376-4,401. Stocks rallied despite uncertainty about monetary policy, economic growth and geopolitics. The market resumed its rally from October 27 local low of 4,103.78 and then it reached another important resistance level, marked by the August 2 daily gap down of 4,550.93-4,567.53. Yesterday it closed below that gap.
Stocks are expected to open 0.3% higher today. So the S&P 500 will continue to fluctuate within a short-term consolidation. It is still close to 4,550 level as we can see on the daily chart:
Futures contract trades sideways
Let’s take a look at the hourly chart of the S&P 500 futures contract. Last week on Monday it broke above the recent trading range above 4,500 level and it went close to the resistance level of around 4,570. The next resistance level is at 4,600. On the other hand, the support level is now at 4,540-4,550.
Conclusion
Stock prices will likely extend their short-term consolidation this morning. There have been no confirmed negative signals so far. However, there are short-term overbought conditions that may lead to a correction at some point.
Here’s the breakdown:
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The S&P 500 continues to trade along 4,550 level; for now it looks like a flat correction within an uptrend.
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There may be a downward correction at some point.
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In my opinion, the short-term outlook is still bullish.
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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' employees and associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
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