Stocks to Open Higher but Another Profit-taking Action is Likely

Stocks to Open Higher but Another Profit-taking Action is Likely

Stocks retraced some of their recent declines on Friday and the S&P 500 index is expected to open higher this morning. So is the downward correction over?

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Q3 2021 hedge fund letters, conferences and more

Hedge Funds Are Making A Comeback, And Smaller Managers Have The Advantage

invest

investThere are signs that the hedge fund industry is making a comeback, but there is a wide dispersion in growth between larger and smaller funds. In a recent paper, Peltz International said investor allocations are flowing into funds with more than $10 billion in assets under management. Yet, the opportunities for smaller funds with less Read More

The S&P 500 index gained 0.72% on Friday, Nov. 12, as investor sentiment turned bullish and the market bounced from the support level of around 4,650. On Wednesday it fell to the local low of 4,630.86 and it was almost 88 points or 1.86% below the previous week’s Friday’s record high of 4,718.50.

The recent rally was not broad-based and it was driven by a handful of tech stocks like Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), Tesla Inc (NASDAQ:TSLA). The market seemed overbought in the short-term and traded within a topping pattern. But today the index may get back to the 4,700 level.

The nearest important support level remains at 4,630-4,650 and the next support level is at 4,600. On the other hand, the resistance level is at 4,700-4,720. The S&P 500 broke below its steep short-term upward trend line recently, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

S&P 500

S&P 500

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Nasdaq Bounced From the 16,000 Level

Let’s take a look at the Nasdaq 100 chart. In the previous week the technology index broke above the 16,000 level and it was trading at the new record high. The market accelerated higher above its short-term upward trend line. But since then it has been retracing the rally. On Friday the index retraced some of the recent declines, however it remained below its short-term local lows, as we can see on the daily chart:

Nasdaq

Nasdaq

Apple Is Still Close to $150, Microsoft Remains Relatively Strong

Let’s take a look at the two biggest stocks in the S&P 500 index, AAPL and MSFT. Apple continues to fluctuate along the $150 price level. It is still well below the early September record high. Microsoft stock was reaching new record highs recently but last week it broke below its upward trend line. So those two big cap tech stocks remain mixed, as we can see on their daily charts:

Apple

Apple

Microsoft

Microsoft

Conclusion

The S&P 500 index retraced some of its recent declines on Friday and today it is expected to open 0.4% higher. So it looks like a downward correction is over and the market may reach new highs or at least extend a short-term consolidation along the 4,700 level. Investors will wait for tomorrow’s Retail Sales number release and some Fed-talk later in the week.

Here’s the breakdown:

  • The S&P 500 is expected to extend its Friday’s advance this morning and it may get to the 4,700 level.
  • Still no positions are justified from the risk/reward point of view.

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Thank you.

Paul Rejczak,

Stock Trading Strategist

Sunshine Profits: Effective Investments through Diligence and Care


The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his 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. Paul Rejczak, Sunshine Profits’ employees, affiliates as well as their family members 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.

Updated on Nov 15, 2021, 10:53 am

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