Briefly: In our opinion, speculative short positions are favored (with stop-loss at 1,985 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 U.S. stock market indexes gained between 1.6% and 2.1% on Tuesday, retracing recent move down, as investors reacted positively to the FOMC Minutes release. The S&P 500 index bounced off following a move below last week’s low. The level of support remains at around 1,925-1,930, marked by recent local lows. On the other hand, the nearest important resistance level is at 1,980-1,985, marked by late September – early October local highs. We can see some increased volatility. For now, it looks like a consolidation within a short-term downtrend:

Expectations before the opening of today’s trading session are positive, with index futures currently up 0.2-0.3%. The main European stock market indexes have gained 0.5-1.2% so far. Investors will now wait for some economic data announcements: Initial Claims at 8:30 a.m., Wholesale Inventories at 10:00 a.m. The S&P 500 futures contract (CFD) is in an intraday uptrend, as it trades above yesterday’s high. The nearest important level of resistance is at around 1,970-1,975, marked by previous highs. On the other hand, the level of support remains at 1,920-1,940, among others, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract (CFD) followed a similar path, as it retraced recent move down. The level of resistance is at around 4,060, marked by previous high. The nearest important support level remains at 4,000, marked by previous short-term resistance level, as the 15-minute chart shows:

Concluding, the broad stock market retraced its recent move down, as it extended short-term consolidation following late September – early October sell-off.  However, we remain bearish, expecting some more downside. 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 1,985. Potential profit target remains 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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