Briefly: In our opinion, speculative short positions are favored (with stop-loss at 1,970 and a profit target at 1,850, S&P 500 index)
Our intraday outlook is bearish, and our short-term outlook is bearish, following a breakout below recent consolidation:
Intraday
(next 24 hours) outlook: bearish
Short-term (next 1-2 weeks) outlook: bearish
Medium-term (next 1-3 months) outlook: neutral
Long-term outlook (next year): bullish
The U.S. stock market indexes gained between 0.8% and 1.2% on Friday, as investors hunted bargains following the recent move down. The S&P 500 index remains in a week-long consolidation, as it trades above the level of 1,900. The nearest important resistance level is at around 1,940, marked by recent local highs. On the other hand, the level of support remains at the psychological 1,900. For now, it looks like a relatively flat correction within a short-term downtrend, as the index is still below its recent downtrend’s important retracements – Fibonacci’s 38.2% at 1,937.9, 50% at 1,948.1. There have been no confirmed downtrend reversal signals so far, as we can see on the daily chart:
Expectations before the opening of today’s session are positive, with index futures currently up 0.4-0.5%. The main European stock market indexes have gained 0.8-1.4% so far. The S&P 500 futures contract (CFD) is in an intraday uptrend, as it retraces last week’s decline. However, the nearest important level of resistance is at around 1,935, marked by previous local high. On the other hand, the support level is at around 1,915, among others, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades close to the resistance level of 3,890-3,915. The support level remains at around 3,870. For now, it looks like an upward correction within a downtrend:
Concluding, the broad stock market is in a correction within its short-term downtrend. We continue to maintain our speculative short position, with stop-loss at 1,970, and a profit target of 1,850 (S&P 500 index). It is always important to set some exit price level in case your analysis is wrong or your trading method fails at some point in time.
Thank you.
Paul Rejczak
Stock Trading Strategist
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