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Stock prices suffered another sharp decline yesterday – is this a change of trend?

The S&P 500 index lost 1.44% on Tuesday, as the broad stock market continued its Monday’s 1.8% sell-off. It reacted to Monday’s better-than-expected ISM Services PMI release. On Thursday the S&P 500 reached new local high of 4,100.51, and on yesterday it went closer to the 3,900 level.

This morning the S&P 500 is expected to open 0.3% lower after an overnight decline of more than 1%. We may see a short-term rebound following the recent declines. It still looks like a consolidation within an uptrend. However, the index broke below its two-month-long upward trend line yesterday, as we can see on the daily chart:

SPX

Futures contract goes sideways

Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke below the slight upward trend line. The support level is at around 3,900.

SP500

Conclusion

The S&P 500 index extended its Monday’s decline yesterday on ongoing recession and inflation worries. The market retraced its recent advances, but we may see a short-term or intraday upward correction at some point. Investors will be waiting for Friday’s PPI release, the next week’s Tuesday’s CPI release and Wednesday’s FOMC release.

Here’s the breakdown:

  • S&P 500 index broke below the 4,000 level and extended its Monday’s decline yesterday.

  • We may see a rebound today, but the market reversed its short-term uptrend.


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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' employees and associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA 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. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families 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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