Stock prices went sideways following their Wednesday’s rally. Was that a short-term topping pattern?
Stock prices went sideways following their Wednesday’s rally. Was that a short-term topping pattern?
The S&P 500 index lost 0.09% on Thursday, as it fluctuated following its Wednesday’s rally of 3.1%. The market broke higher after Jerome Powell’s dovish speech . Yesterday the broad stock market’s gauge was the highest since September 12, but it bounced down from the 4,100 level.
This morning the S&P 500 is expected to open 1.5% lower following better than expected Nonfarm Payrolls release. The market will likely retrace some of its Wednesday’s rally, at least at the opening of the trading session . The index continues to trade above its two-month-long upward trend line, as we can see on the daily chart:
Futures Contract Is Closer to 4,000 Again
Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke below its narrow consolidation along the 4,100 level. The support level is at 3,950-4,000.
Conclusion
The broad stock market will likely open much lower this morning. On Wednesday it rallied over 3% and yesterday it traded within a consolidation. So it will retrace some of the advance, and we may see more short-term uncertainty.
Here’s the breakdown:
- The S&P 500 paused its rally yesterday, and today it will likely retrace some of it.
- It still looks like a consolidation following a rally from the October low.
Thank you.
Paul Rejczak,
Stock Trading Strategist