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 gained 0.1-0.4% on Tuesday, retracing some of their recent decline, as investors hunted for bargains. The S&P 500 index remains below the level of 2,100. The nearest important level of resistance is at around 2,070-2,080, marked by previous local lows. On the other hand, support level remains at 2,040-2,050, marked by March local lows, as we can see on the daily chart:
Expectations before the opening of today's trading session are positive, with index futures currently up 0.8-0.9%. The main European stock market indexes have gained 1.4-2.3% so far. Investors will now wait for series of economic data announcements: Challenger Job Cuts report at 7:30 a.m., ADP Employment Change number at 8:15 a.m., ISM Index, Construction Spending at 10:00 a.m., Crude Inventories at 10:30 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it retraces some of its recent move down. The nearest important level of resistance is at around 2,070-2,080, and support level is at 2,040-2,050:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades within an intraday uptrend. The nearest important level of resistance is at 4,450 and support level remains at 4,370-4,400, as the 15-minute chart shows:
Concluding, the broad stock market fluctuates following recent sell-off. For now, it looks like a correction within a short-term downtrend. We continue to maintain our already profitable speculative short position (2,098.27, S&P 500 index), as we expect a medium-term 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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