Stock prices extended their advance on Friday, as the S&P 500 index reached the 4,000 level. We may see a profit-taking action, however, bulls are still in charge.
The S&P 500 index gained 0.92% on Friday following its Thursday rally of 5.5%. The market remained bullish after Thursday’s Consumer Price Index release and the broad stock market’s gauge went its highest since September 13. On Friday, the daily high was at 4,001.48.
This morning the S&P 500 index is expected to open 0.3% lower. We may see a profit-taking action at some point. However, there have been no confirmed negative signals so far.
The S&P 500 index broke above its previous local highs last week and it got to the 4,000 level, as we can see on the daily chart.
Futures contract – Short-term uncertainty
Let’s take a look at the hourly chart of the S&P 500 futures contract. It went slightly above the 4,000 level on Friday. For now, it looks like a flat correction within an uptrend or a short-term consolidation. The resistance level is at 4,000- 4,050, among others.
In our opinion, no positions are currently justified from the risk/reward point of view.
Conclusion
The stock market will likely fluctuate following its last week’s Thursday’s-Friday huge rally. The S&P 500 index may take a breather, as it got to the 4,000 level last week. We may see some profit-taking action in the day, as the market seems overbought in the short term. However, there have been no confirmed negative signals so far.
Here’s the breakdown:
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The S&P 500 may remain below the 4,000 level for some time, as investors are likely to take short-term profits off the table.
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For now, it looks like a consolidation within an uptrend.
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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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