Stocks’ Breakout May Be Short-Lived, NFP Release Leaves Question Marks
Sunshine Profits | Oct 08, 2021 10:09AM ET
Stocks broke above their consolidation yesterday. Is this an upward reversal or just another upward correction? The NFP release leaves question marks.
The S&P 500 index gained 0.83% on Thursday following breaking above the recent local highs and the 4,400 price level. The market retraced most of its late September’s decline yesterday as investors awaited today’s monthly jobs data release, among other factors. The Nonfarm Payrolls release has been worse than expected at +194,000.
The ):
S&P 500 Remains Above Medium-Term Support Level
The S&P 500 index is trading below its almost year-long upward trend line. The nearest important medium-term support level remains at 4,200-4,300, as we can see on the weekly chart:
Dow Jones Got Back To Its Downward Trend Line
Let’s take a look at the { {169|Dow Jones Industrial Average}} chart. The blue-chip index also broke above its short-term consolidation yesterday. However, it remained below a month-long downward trend line. The nearest important resistance level is at 35,000, as we can see on the daily chart:
Apple Is Back Above $142 Price Level Again
Apple (NASDAQ:AAPL) stock weighs around 6.1% in the S&P 500 index, so it is important for the whole broad stock market picture. The stock broke above $142 price level yesterday, but for now it looks like a correction, within a downtrend or a consolidation following the September’s decline. The resistance level is now at $144, marked by the previous local highs.
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Conclusion
The S&P 500 index has been trading within a short-term consolidation since last Thursday. Yesterday, the index broke above that consolidation and it got back above the 4,400 level. For now it looks like an upward correction following the late September’s declines.
The risk/reward perspective seems less favorable right now and no positions are currently justified.
Here’s the breakdown:
- The S&P 500 broke above its week-long consolidation, but bulls are not out of the woods yet, as the worse-than-expected jobs data release may lead to some more uncertainty.
- Our speculative short position has been closed last Friday at a much lower level.
- We are still expecting more downward pressure and a correction to 4,200-4,250 level.
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