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S&P 500 Hit New Yearly Low, But Still Doesn’t Look Bearish

By Sunshine Profits (Paul Rejczak)Stock MarketsMay 03, 2022 10:00AM ET
www.investing.com/analysis/sp-500-hit-new-yearly-low-but-it-still-doesnt-look-bearish-200623401
S&P 500 Hit New Yearly Low, But Still Doesn’t Look Bearish
By Sunshine Profits (Paul Rejczak)   |  May 03, 2022 10:00AM ET
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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 the conflict in Ukraine. Stocks reversed their intraday decline and it may look like a more permanent reversal. However, there have been no confirmed positive signals so far. The S&P 500 index this morning is gaining, and we may see a consolidation ahead of tomorrow’s important Fed’s interest rate decision release.

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):

S&P 500 Daily Chart.
S&P 500 Daily Chart.

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.

S&P 500 E-Mini Futures Hourly Chart.
S&P 500 E-Mini Futures Hourly Chart.

(Chart by courtesy of http://tradingview.com)

Conclusion

The S&P 500 index may see a consolidation following yesterday’s rebound. There’s a lot of uncertainty concerning tomorrow’s Fed’s release. The panic seen last Friday and yesterday 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.
S&P 500 Hit New Yearly Low, But Still Doesn’t Look Bearish
 

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S&P 500 Hit New Yearly Low, But Still Doesn’t Look Bearish

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Comments (3)
James Dumas
James Dumas May 03, 2022 3:14PM ET
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Please take note of who the President is. 2550 on the way.
Jose Cabreja
Jose Cabreja May 03, 2022 12:44PM ET
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well it was/still a huge Bubble..more 🩸🩸🩸 to come.
Mark Manley
Mark Manley May 03, 2022 12:39PM ET
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I follow what you're saying here, but there's no getting around the fact that a 700 point loss in a couple of months is bear market
First Last
First Last May 03, 2022 12:39PM ET
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If it didn't fall 20%, ...
Paul Rejczak
Paul Rejczak May 03, 2022 12:39PM ET
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Yeah, there's no doubt about long-term bearish outlook of that decline from January high (4819). I'm talking about short- to medium-term outlook here, it still doesn't look bearish considering a long position opened above 4200. The market looks like it's turning higher right now, but from a long-term perspective it may only be a bigger correction within a decline from that January high, or just a move within a possible long-term 4000-5000 consolidation maybe.. who knows.
 
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