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S&P 500 bounced to 4,400 – is the downtrend over?

The S&P 500 index gained 0.69% on Monday as it bounced from Friday’s local low of 4,335.31. On Friday it was 271.76 points or 5.90% below the July 27 medium-term high of 4,607.07. Recently the market was selling off on strengthening the U.S. dollar, among other factors.

Stocks are expected to open 0.5% higher, so the S&P 500 index will likely extend its yesterday’s rebound and it will get back above the 4,400 level. However, it is still trading below a month-long downward trend line as we can see on the daily chart:

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Futures Contract Is Closer to 4,450

Let’s take a look at the hourly chart of the S&P 500 futures contract. This morning it continues higher. The nearest important support level is now at around 4,400-4,420 and the resistance level is at 4.450-4,460, among others.

(Click on image to enlarge)

Conclusion

The S&P 500 will extend a rebound this morning. For now, it looks like an upward correction following the recent declines. However, on a longer time frame, the recent declines may have been just a downward correction within a medium-term uptrend.

Investors will be waiting for tomorrow’s PMI releases and the important Fed Chair Powell’s speech at the Jackson Hole Symposium on Friday.

Here’s the breakdown:

• Stock prices are gaining from their last week’s new lows.
• The S&P 500 is expected to get back above the 4,400 level today.
• In my opinion, the short-term outlook is still bullish.

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