The S&P 500 index extended its uptrend after breaking above the 4,600 level. However, today we will likely see some profit-taking action.
The broad stock market index gained 1.23% on Tuesday, following its Monday’s gain of 0.7%. Stocks extended their uptrend on a potential Ukraine conflict ceasefire news yesterday.
There’s still a lot of geopolitical uncertainty, but investors keep jumping back into stocks. However, we may see some short-term profit-taking action.
The nearest important resistance level is now at around 4,650-4,700. On the other hand, the support level is at 4,550-4,600, marked by the recent resistance level. The S&P 500 index broke above its January-February local highs along with the 4,600 level, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):
Futures Contract Remains Above Its Upward Trend Line
Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading above the short-term upward trend line and above the 4,600 level. We can see some technically overbought conditions. However, there have been no confirmed negative signals so far.
We are maintaining our profitable long position from the 4,340 level. (our premium Stock Trading Alert includes details of our trading position along with the stop-loss and profit target levels) (chart by courtesy of http://tradingview.com):
Conclusion
Although we may see some short-term profit-taking action on the S&P 500, there have been no confirmed negative signals so far. However, some clear technical overbought conditions may lead to a correction.
The market will be waiting for Friday’s monthly jobs data release. This morning we’ve got the ADP Nonfarm Employment Change release, and it was as expected.
Here’s the breakdown:
• The S&P 500 index further extended its uptrend yesterday, but some profit-taking action seems likely in the near term.
• We are maintaining our profitable long position (opened on Feb. 22 at 4,340).
• We are still expecting some upside from the current levels; however, it is time to get more cautious as there may be a downward correction.