Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,085 and profit target at 1,950, 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 0.3% and 1.2% on Monday, retracing some of their recent move up, as investors took profits following long holiday weekend. Our yesterday’s negative intraday outlook has proved quite accurate. The S&P 500 index broke below week-long consolidation, as it fell below the level of 2,060-2,065. The nearest important level of support remains at around 2,050-2,055, marked by the November 21st daily gap up of 2,053.8-2,056.8. The next important support level is at around 2,035-2,040, marked by previous local extremes, among others. There have been no confirmed negative signals so far, however, we still can see overbought conditions accompanied by negative divergences:
Expectations before the opening of today’s trading session are slightly positive, with index futures currently up 0.1%. The main European stock market indexes have been mixed so far. Investors will now wait for the Construction Spending number announcement at 10:00 a.m. The S&P 500 futures contract (CFD) is in an intraday consolidation, following yesterday’s decline. The nearest important level of resistance is at around 2,045-2,050. On the other hand, resistance level is at 2,060, as we can see on the 15-minute chart:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it fluctuates along the level of 4,300. The nearest important level of support is at around 4,270-4,280. On the other hand, level of resistance is at 4,310-4,320, among others, as the 15-minute chart shows:
Concluding, the broad stock market retraced some of its recent advance, as it moved away from last week’s all-time high. There have been no confirmed negative signals so far. However, we still expect a downward correction or an uptrend reversal. Therefore, we continue to maintain our speculative short position. Stop-loss is at 2,085 and potential profit target is at 1,950 (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
Stock Trading Alerts
