Stocks extended their short-term uptrend on Friday, but this week we may see some more uncertainty and a possible profit-taking action.

The S&P 500 index gained 0.53% on Friday following its Thursday’s advance of 1.4%. The broad stock market’s gauge extended its short-term uptrend after breaking above the 4,500 level. It gained over 380 points from the Mar. 14 local low of around 4,162. There have been no confirmed negative signals so far. However, we may see another correction and a profit-taking action at some point.

There’s still a lot of uncertainty concerning the ongoing Ukraine conflict, but investors were recently jumping back into stocks despite that geopolitical uncertainty. This morning the index is expected to open virtually flat after an overnight advance followed by its retracement.

The nearest important resistance level is at around 4,550-4,600, marked by the previous local highs. On the other hand, the support level is at 4,400-4,450. The S&P 500 index trades closer to its January-February local highs along with the 4,600 level, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

(Click on image to enlarge)

Futures Contract Remains Above the 4,500 Level

Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading close to the new local high. The potential resistance level is at around 4,585, marked by the previous highs. There have been no confirmed negative signals so far.

We are maintaining our profitable long position from the 4,340 level, as we are still expecting a bullish price action in the near term. However, to protect our gain, we decided to move the stop-loss (take profit) and price target levels higher. (our premium Stock Trading Alert includes details of our trading position along with the stop-loss and profit target levels) (chart by courtesy of http://tradingview.com):

(Click on image to enlarge)

Conclusion

The S&P 500 index will likely open virtually flat this morning. However, the futures contract retraced its overnight advance, so we may see more uncertainty and a potential profit-taking action.

The war In Ukraine remains a negative factor for the markets. The global markets will also be waiting for this Friday’s monthly jobs data release.

Here’s the breakdown:

• The S&P 500 index extended its uptrend on Friday; this morning the futures contract retreated from its new local high.
• We are maintaining our profitable long position (opened on Feb. 22 at 4,340), but we moved stop-loss (take profit) and price target levels higher.
• We are still expecting an advance from the current levels.