S&P 500 Already in a Correction?
Sunshine Profits | Jul 07, 2023 09:15AM ET
Stocks retraced their recent rally yesterday – is this a new downtrend, or just a quick correction?
The S&P 500 index lost 0.79% on Thursday as it went closer to the 4,400 level again. The market retraced its rally, and it closed Friday’s daily gap up yesterday. On Friday, the index was the highest since April of 2022. Last week it retraced all of its recent declines following economic data releases, among other factors.
There is still a lot of uncertainty concerning monetary policy and some technology stocks’ valuation concerns, but the investors’ sentiment remains bullish.
Stocks are expected to open 0.1% following lower than expected Nonfarm Payrolls release. The index remains above the 4,400 level, as we can see on the daily chart:
Futures Contract Extends Consolidation
Let’s take a look at the hourly chart of the S&P 500 futures contract. Last week it rallied up to the 4,500 level again and yesterday it retraced some of the rally. The nearest important support level is at 4,400-4,420 and the resistance level remains at 4,480-4,500.
Conclusion
The S&P 500 index will likely go sideways following its yesterday’s retreat. There have been no confirmed negative signals so far. For now it looks like a relatively flat correction within an uptrend. However, the market may see a more pronounced profit taking action at some point.
Here’s the breakdown:
- The S&P 500 will likely extend its consolidation above the 4,400 level..
- There have been no confirmed negative signals, however, a downward correction may be in cards.
- In my opinion, the short-term outlook is bullish.
Thank you.
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