Stocks sold off on Thursday, as Central Banks signaled more tightening ahead. Is this a new downtrend?
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This morning the S&P 500 will likely open 1.0% lower, so it may see more downside. Stock prices will likely break below their local lows and a month-long consolidation.
Last week the index broke below its two-month-long upward trend line, as we can see on the daily chart:
Futures Contract Trades Below 3,900
Let’s take a look at the hourly chart of the S&P 500 futures contract. It is extending a decline and right now, it’s trading below the 3,900 level. The resistance level is now at 3,950-4,000.
Conclusion
The S&P 500 index will likely extend its short-term downtrend at the opening of today’s trading session. We may see an intraday correction or a rebound following the recent sell-off. However, there have been no confirmed positive signals so far. We may see an increased volatility due to an expiration of series of index and stock derivatives, known as quadruple witching.
Here’s the breakdown:
- S&P 500 index broke below its over month-long trading range.
- Stock prices may extend the downtrend, however, they may see a volatility later in the day.
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Thank you.
Paul Rejczak,
Stock Trading Strategist
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