By Paul Rejczak. Originally published at ValueWalk.
Stocks extended their downtrend yesterday, but they rebounded and closed positive. So was it an upward reversal or just another upward correction?
The S&P 500 index gained 0.57% on Monday after falling to the daily low of 4,062.51. It was the lowest since last year’s May. The market reacted to the quarterly earnings, poor economic data releases, Fed’s monetary policy tightening plans and Ukraine conflict. Stocks reversed their intraday decline and it may look like a more permanent reversal. However, there have been no confirmed positive signals so far. This morning the S&P 500 index is expected to open 0.2% higher and we may see a consolidation ahead of tomorrow’s important Fed’s interest rate decision release.
Q1 2022 hedge fund letters, conferences and more
The nearest important resistance level is now at around 4,200-4,250. On the other hand, the support level is at 4,050-4.100, marked by the local low. The S&P 500 index extended its four-month-long downtrend, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):
Futures Contract – Consolidation Following Bounce
Let’s take a look at the hourly chart of the S&P 500 futures contract. Yesterday it fell below the 4,100 level, but it quickly retraced the decline. This morning it is trading within a consolidation along the 4,150 level.
On Thursday before the opening of the cash market we decided to open a speculative long position. We are still expecting an upward correction from the current levels. (our Stock Trading Alert includes details of our trading positions along with the stop-loss and profit target levels). (chart by courtesy of http://tradingview.com):
Conclusion
The S&P 500 index will likely open 0.2% higher today and we may see a consolidation following yesterday’s rebound. There’s a lot of uncertainty concerning tomorrow’s Fed’s release. Friday’s and yesterday’s panic may suggest that at least a short-term bottom may be in sight.
Here’s the breakdown:
- The S&P 500 index extended its downtrend yesterday, but it closed higher.
- We are still expecting an upward correction from the current levels.
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Thank you.
Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his 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. Paul Rejczak, Sunshine Profits’ employees, affiliates as well as their family members 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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