Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,030 and a profit target at 1,900, S&P 500 index)

Our intraday outlook is bearish, and our short-term outlook is bearish:

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 main U.S. stock market indexes were mixed between -1.0% and +0.3% on Monday, extending their short-term uncertainty, as investors continued to take profits in some technology stocks that had performed well recently. The S&P 500 index slightly deepened its move down, as it tested the support level of 1,980-1,985. The nearest important level of resistance remains at around 2,000-2,010, marked by the September 4th all-time high of 2,011.17, among others. The market is in a short-term downtrend, following consolidation along the level of 2,000, as we can see on the daily chart:

Expectations before the opening of today’s session are slightly negative, with index futures currently down 0.1-0.2%. The European stock market indexes have lost 0.3-0.5% so far. Investors will now wait for the Producer Price Index release at 8:30 a.m. Producer inflation is expected to slow further in light of low oil prices, which may support extended easy monetary policy. The S&P 500 futures contract (CFD) remains close to yesterday’s local low, following recent move down. The level of support is at around 1,980, and the nearest important resistance level is at 1,990-2,000. The market is in a descending trading channel, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades close to its recent local low, following breakout below the support level of 4,050-4,060. The nearest important level of support is at around 4,000-4,020. There have been no confirmed positive signals so far:

Concluding, the broad stock market remains close to its recent local lows, as it trades more than one percent below the early September all-time high. We remain bearish, expecting a downward correction or uptrend reversal. Therefore, we continue to maintain our already profitable speculative short position with entry point at 2,000.5 (S&P 500 index). The stop-loss is at the level of 2,030 and potential profit target is at 1,900 (S&P 500 index). It is always important to set some exit price level in case some events cause the price to move in the unlikely direction. Having safety measures in place helps limit potential losses while letting the gains grow.

Thank you.

Paul Rejczak
Stock Trading Strategist
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