Is It Time For Stocks To Get Defensive Again?
Sunshine Profits | Feb 01, 2022 10:02AM ET
Stocks extended their rally yesterday, as the S&P 500 index broke above the 4,500 level. Is this still just an upward correction?
The S&P 500 index gained 1.89% on Monday, as it extended its gains from Friday and broke above the 4,500 level. It retraced more of its recent declines after breaking above last week’s consolidation along the 4,300-4,400 level. On last Monday’s low of 4,222.62, the market was 596 points, or 12.4%, below the Jan. 4 record high of 4,818.62. And yesterday it reached the new high of 4,516.89. It still looks like an upward correction within a downtrend, however. The market may be also trading within a new uptrend.
The consolidation along the 4,800 level in late December to early January was a topping pattern, and the index retraced all of its record-breaking advance seen in December. On Friday, it broke above a steep short-term downward trend line.
The nearest important ):
Apple Rallies Again
Recently, Apple (NASDAQ:AAPL) stock fluctuated along the support level of $155.0-$157.5 following the mid-January downtrend ahead of its quarterly earnings release. The stock reversed the downtrend after breaking above a short-term consolidation and since the earnings release it gained more than 10%. The resistance level is at around $180-$183, marked by the Jan. 4 record high of $182.94.
Conclusion
The S&P 500 index extended its advance yesterday and it broke slightly above the 4,500 level. It still looks like an upward correction following mid-January declines and a rebound within a new medium-term downtrend.
Stocks may further extend their uptrend, but there’s a risk of a short-term downward reversal. Today, we may see some uncertainty and a consolidation along the 4,500 level. The market will be waiting for the quarterly earnings releases (Advanced Micro Devices Inc (NASDAQ:AMD), Alphabet (NASDAQ:GOOGL) today after the session’s close, Meta (NASDAQ:FB) tomorrow and Amazon (NASDAQ:AMZN) on Thursday, among others) and the monthly jobs data announcement on Friday. There is also uncertainty concerning Russia-Ukraine tensions.
Get The News You Want
Here’s the breakdown:
- The S&P 500 broke above the 4,500 level again; it still looks like an upward correction.
- We decided to close our speculative long position from last Tuesday (4,335 level) at the opening of today’s cash market’s trading session – a gain of around 175 index points. In our opinion, no positions are currently justified from the risk/reward point of view.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.