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 U.S. stock market indexes gained between 0.6% and 0.9% on Tuesday, retracing some of their recent move down, as investors awaited today’s FOMC Rate Decision, among others. The S&P 500 index bounced off the support level of 1,980-1,985, as it got closer to the September 4all-time high of 2,011.17. The nearest important level of resistance is at around 2,000-2,010. There is no clear short-term direction, as the index continues to fluctuate following the August rally. For now, it looks like a flat correction within an uptrend, however a bearish scenario still cannot be excluded here:

Expectations before the opening of today’s session are virtually flat. The main European stock market indexes have gained 0.3-0.6% so far. Investors will now wait for series of economic data announcements: Consumer Price Index, Current Account Balance at 8:30 a.m., NAHB Housing Market Index at 10:00 a.m., the FOMC Rate Decision at 2:00 p.m. Investors hope for an extension of the Fed’s easy monetary policy, which is positive for the long-term uptrend. The S&P 500 futures contract (CFD) trades along the level of 2,000, following yesterday’s rebound. The nearest important resistance level is at around 2,005-2,010, marked by previous highs. On the other hand, the level of support remains at 1,980-1,985:

The technology Nasdaq 100 futures contract (CFD) followed a similar path, as it bounced off the support level of 4,010-4,030. However, it remains relatively weaker than the broad stock market. The nearest important level of resistance is at around 4,080-4,100, as we can see on the 15-minute chart:

Concluding, the broad stock market rebounded following recent move down. It currently trades close to early September all-time high. However, 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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