S&P 500 Rallied 300 Points - Is Holding Long Position Still Justified?

The S&P 500 extended its short-term uptrend on Friday after breaking above the early March local high. Will we see some profit-taking action soon?

The broad stock market index gained 1.17% on Friday following its Thursday’s advance of 1.2%. Stocks extended their rally and since last Monday’s low of around 4,162, the index has already gained over 300 points. The market accelerated higher after the Wednesday’s FOMC interest rate hike. There’s still a lot of uncertainty concerning the ongoing Ukraine conflict, however, investors were jumping back into stocks despite that geopolitical uncertainty.

This morning the S&P 500 index is expected to open 0.1% lower. We may see a consolidation or some profit-taking action following the mentioned 300-point rebound from the last Monday’s low.

The nearest important resistance level is at around 4,500. On the other hand, the support level is at 4,400-4,415, marked by the previous local high. The S&P 500 index trades just below its early February consolidation, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Futures Contract Broke Above the Previous High

Let’s take a look at the hourly chart of the S&P 500 futures contract. On Friday it broke above the early March local highs of around 4,400. It’s the nearest important support level right now. We may see a correction following the recent run-up. However, there have been no confirmed negative signals so far.

We are maintaining our profitable long position from the 4,340 level, as we are still expecting a bullish price action in the near-term (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

Stocks extended their uptrend once again on Friday, as the S&P 500 index broke above the previous local high. It rallied over 300 points from its last Monday’s local low, so we may see a consolidation or some profit-taking action soon. This morning the broad stock market’s gauge is expected to open 0.1% lower.

The war In Ukraine is still a negative factor for the markets.

Here’s the breakdown:

• The S&P 500 index rallied over 300 points from the last Monday’s local low; we may see a correction at some point.
• We are maintaining our profitable long position.
• We are still expecting an advance from the current levels.

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Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care

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The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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