Stocks are about to open lower – more uncertainty as the S&P 500 trades along 4,000.
The S&P 500 index lost 0.07% on Tuesday following its recent advances and another breakout above the 4,000 level. Recently the sentiment improved after economic data releases, weakening U.S. dollar, among other factors. The S&P 500 bounced from its last Thursday’s local low of 3,885.54. On Monday it went the highest since December 14, and the high was at 4,039.31.
Today we’ll likely see a sell-off at the open, as the S&P 500 is expected to open 1.1% lower following yesterday’s Microsoft’s quarterly earnings release. So the index will get back below the 4,000 level. The S&P 500 continues to trade within a medium-term consolidation, as we can see on the daily chart:
Futures Contract Went Below 4,000 Again
Let’s take a look at the hourly chart of the S&P 500 futures contract. On Monday it extended a short-term uptrend, but this morning it is retracing some of the recent rally. The resistance level remains at 4,000-4,050.
Conclusion
The stock market will open much lower this morning on worse-than-expected earnings releases. However, we may see more uncertainty and a consolidation of the S&P 500 index. Today after the session’s close we will have a report from TSLA and tomorrow from INTC, among others.
Here’s the breakdown:
- The S&P 500 index is expected to get back below the 4,000 level this morning.
- Investors will be waiting for more earnings, economic data releases.
- In my opinion, the short-term outlook is neutral.
Thank you.
Paul Rejczak,
Stock Trading Strategist