Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,025 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 0.7-1.6% on Tuesday, extending their short-term downtrend, as investors reacted to worsening global economic conditions following oil prices crash. Our yesterday’s bearish intraday outlook has proved accurate. The S&P 500 index is the lowest since late October, as it trades below the level of 2,000. The nearest important support level is at around 2,065, marked by previous local highs. On the other hand, level of resistance is at 1,990-2,000, among others, as we can see on the daily chart:
Expectations before the opening of today’s trading session are positive, with index futures currently up 0.4%. The main European stock market indexes have lost 0.5-0.8% so far. Investors will now wait for some economic data announcements: Consumer Price Index, Current Account Balance at 8:30 a.m., FOMC Rate Decision at 2:00 p.m. The S&P 500 futures contract (CFD) trades along the level of 1,970. The nearest important level of support remains at around 1,965-1,970, marked by recent local lows, as we can see on the 15-minute chart:
The technology Nasdaq 100 futures contract (CFD) bounced off support level at around 4,080. It currently trades along the level of 4,100. There have been no confirmed positive signals so far, however, we can see some short-term oversold conditions:
Concluding, the broad stock market extended its short-term downtrend, as the S&P 500 index broke below its August-September consolidation, following a move below the level of 2,000. We continue to maintain our already profitable short position with entry point at 2,038 (November 12th opening price of the S&P 500 index). We decided to lower our stop-loss level to 2,025. Potential profit target remains 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
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