The S&P 500 index remained below the important 3,900 level on Tuesday, as investors awaited today’s FOMC release. Will that event lead to a correction?

The S&P 500 index lost 0.41% on Tuesday, following its Monday’s loss of 0.8%, as it continued to trade along the 3,900 level. Last week it extended an uptrend from the October 13 new medium-term low of 3,491.58. The market went up to the resistance level of 3,900 and since Friday it has been fluctuating below the 3,900 level. This morning the S&P 500 index is expected to open 0.1% lower on the better-than-expected ADP Non-Farm Employment Change release. The market will be waiting for the Fed’s Monetary Policy release at 2:00 p.m. and their Conference at 2:30 p.m. So we’ll likely see increased volatility later in the day.

The S&P 500 index continues to trade above the upward trend line, as we can see on the daily chart (chart courtesy of http://stockcharts.com):

(Click on image to enlarge)

Futures Contract is Below the 3,900 Level Again

Let’s take a look at the hourly chart of the S&P 500 futures contract. It’s trading below the 3,900 level this morning. The resistance level is at 3,900-3,950, and the nearest important support level is at around 3,840-3,850. The market remains above a two-week-long upward trend line. (chart by courtesy of http://tradingview.com):

(Click on image to enlarge)

Conclusion

This morning stocks will open virtually flat, but later in the day, we will likely see increased volatility and a much bigger trading range. Despite the interest rate uncertainty, there have been no confirmed negative signals so far.

Here’s the breakdown:

• The S&P 500 index continued to trade along the 3,900 level yesterday
• Stock prices will likely react to today’s FOMC release.

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