S&P 500 - Is It New Downtrend or Still Just a Correction?
September 7, 2023 (Investorideas.com Newswire) The S&P 500 index lost 0.70% on Wednesday as it extended its Tuesday's decline of 0.4%. The market reacted to strengthening U.S. dollar, among other factors. Recently stock prices were rallying on worse than expected economic data and reduced pressure for the further monetary policy tightening. And on previous Friday the index bounced from the local low of around 4,356 despite a hawkish speech from the Fed Chair Powell.
Stocks will likely open 0.7% lower this morning so the S&P 500 may get closer to the 4,400 level again. The index retraced more of its recent rebound as we can see on the daily chart:
Futures Contract Trades Below 4,450
Let's take a look at the hourly chart of the S&P 500 futures contract. This morning it is extending a short-term downtrend. The resistance level is now at around 4,480-4,500. On the other hand, the support level is now at 4,400.
Conclusion
The S&P 500 is expected to open lower this morning, so the broad stock market will continue its short-term declines. Last week the investors' sentiment improved as the pressure for further monetary policy tightening somewhat eased. But stocks may extend a medium-term consolidation after bouncing off their mid-July's local lows resistance level.
Here's the breakdown:
- Stock prices may extend their two-month-long consolidation.
- The S&P 500 will likely get closer to the 4,400 level again.
- In my opinion, the short-term outlook is still bullish.
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