Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, and profit target at 1,980, S&P 500 index)

Our intraday outlook is bearish, and our short-term outlook is bearish:

Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): bullish

The U.S. stock market indexes lost 1.0-1.2% on Tuesday, as investors reacted to economic data announcements, among others. The S&P 500 index retraced some its recent move up, as it got further away from all-time high of 2,134.72. The nearest important level of support is at around 2,085-2,100, marked by some previous local lows. On the other hand, resistance level is at 2,115-2,120. There have been no confirmed negative signals so far. However, we can see negative technical divergences:

Expectations before the opening of today's trading session are slightly positive, with index futures currently up 0.1-0.2%. The main European stock market indexes have gained 0.1-0.5% so far. Investors will now wait for the MBA Mortgage Index release at 7:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, following yesterday's move down. The nearest important level of support is at around 2,095-2,100, marked by yesterday's local low. On the other hand, resistance level is at 2,115, among others, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it retraces some of yesterday's decline. The nearest important level of support is at 4,450-4,460, and resistance level is at 4,500, as we can see on the 15-minute chart:

Concluding, the broad stock market broke below its short-term consolidation as the S&P 500 index got closer to the level of 2,100. There have been no confirmed negative signals so far. However, we continue to maintain our speculative short position (2,098.27, S&P 500 index), as we expect a downward correction or an uptrend reversal. Stop-loss is at 2,140, and potential profit target is at 1,980. You can trade S&P 500 index using futures contracts (S&P 500 futures contract - SP, E-mini S&P 500 futures contract - ES) or an ETF like the SPDR S&P 500 ETF - SPY. 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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