Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,030 and 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 lost between 1.5% and 2.1% on Thursday, extending their short-term downtrend, as investors intensified their selling to take profits following August rally. Our yesterday’s bearish intraday outlook has proved accurate. The S&P 500 index broke below the support level of 1,980-1,985, marked by some previous local lows, which is a negative signal. The nearest important level of resistance is at around 1,980. On the other hand, potential support level is at 1,950-1,960, among others. The market is in a downward correction, testing the June-July consolidation, as we can see on the daily chart:

Expectations before the opening of today’s session are slightly positive, with index futures currently up 0.1%. The European stock market indexes have been mixed between -0.1% and +0.6% so far. Investors will now wait for some economic data announcements: U.S. GDP Third Estimate at 8:30 a.m., Michigan Sentiment at 9:55 a.m. The S&P 500 futures contract (CFD) is in a relatively narrow intraday trading range, following yesterday’s move down. The nearest important level of resistance is at around 1,970-1,975, marked by some previous support levels. On the other hand, the support level is at 1,960, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) is slightly below its previous local low, as it bounces off the level of support at around 4,000. The nearest important resistance level remains at 4,030, and the next resistance level is at 4,050-4,060, among others:

Concluding, the broad stock market extended its short-term downtrend, as the S&P 500 index fell below previous local lows. 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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