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 lost between 0.6% and 1.0% on Monday, retracing some more of last week’s move up, as investors continued to take profits. Our Monday’s bearish intraday outlook has proved accurate.(link) The S&P 500 index fell below the level of 2,000 again, as it bounced off the resistance level at around 2,020, marked by an all-time high of 2,019.26. The nearest important resistance level is at 2,000. On the other hand, the level of support is at around 1,980-1,985, marked by previous lows. There have been no confirmed negative signals so far, however, we still can see negative technical divergences accompanied by medium-term overbought conditions:

Expectations before the opening of today’s session are negative, with index futures currently down 0.3-0.4%. The main European stock market indexes have lost 1.0-1.3% so far, following some worse than expected economic data releases. The S&P 500 futures contract (CFD) is in an intraday downtrend, as it trades around the level of 1,980. The level of resistance remains a 2,000-2,015, marked by recent highs. On the other hand, potential support level is at 1,970, marked by previous local low, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract (CFD) is in a similar intraday downtrend, as it retraces recent move up. The nearest important level of support is at around 4,010-4,020, marked by previous lows. On the other hand, the resistance level remains at around 4,050-4,060, as the 15-minute chart shows:

Concluding, the broad stock market has once again turned lower, retracing most of its recent rally. We remain bearish, expecting a downward correction or uptrend reversal. Based on my experience, medium-term divergences seem more important than the lack of clarity for the short term. 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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