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Thursday, July 7, 2022

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S&P 500 – New Medium-Term Low: Is the Panic Over?

By Paul Rejczak. Originally published at ValueWalk.

S&P 500

The S&P 500 index accelerated its sell-off, as it broke below the 3,800 level yesterday. The market is frightened by tomorrow’s FOMC Statement release – is it getting closer to a bottom?

The broad stock market index lost 3.88% on Monday, following its last week’s Thursday’s-Friday’s sell-off of more than 5%. Yesterday’s daily low was at 3,734.30. The S&P 500 index was 1084.3 points or 22.5% below its Jan. 4 record high of 4,818.62.


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There’s still a lot of uncertainty and worries about inflation data, tightening Fed’s monetary policy and the Russia-Ukraine conflict. The market will be now waiting for tomorrow’s FOMC Rate Decision announcement. This morning the S&P 500 index is expected to open 0.6% higher following Producer Price Index release, and we may see an attempt at retracing some of the sell-off.

The nearest important resistance level is now at around 3,800-3,850, marked by the previous support level. The resistance level is also at 3,900. On the other hand, the support level is at 3,750. The S&P 500 index broke below its late May local low, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

S&P 500

Futures Contract – Below the Previous Lows

Let’s take a look at the hourly chart of the S&P 500 futures contract. It was trading within a consolidation above the 4,080 level last week, and on Thursday it broke lower. Yesterday the market broke below its previous lows. However, we may see a short-term upward correction here.

S&P 500

Conclusion

The S&P 500 index will likely open 0.6% higher this morning and we may finally see a rebound after a three-day-long sell-off.

Investors will be waiting for the Wednesday’s FOMC’s interest rate decision release.

Here’s the breakdown:

  • The S&P 500 index accelerated its sell-off on Monday, as it lost almost 4%; we may see a rebound this morning.
  • In our opinion, no positions are currently justified from the risk/reward point of view.

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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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