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 main U.S. stock market indexes lost between 0.2% and 0.5% on Monday, extending their short-term consolidation, as investors continued to hesitate following recent move up. The S&P 500 index trades along the level of 2,100. There have been no confirmed negative signals so far, however, we still can see some negative medium-term technical divergences. The nearest important level of resistance is at around 2,110-2,115, marked by local highs, and the next resistance level is at 2,130-2,135, marked by late May all-time high. On the other hand, support level is at 2,090-2,100, and the next level of support is at 2,040-2,060:

Expectations before the opening of today's trading session are slightly negative, with index futures currently down 0.2%. The European stock market indexes have lost 0.1-0.6% so far. Investors will now wait for the Factory Orders number release at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday consolidation, following yesterday's move down. The nearest important level of resistance is at around 2,100, and support level is at 2,080, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades within an intraday consolidation, along the level of 4,570. The nearest important level of resistance is at 4,580-4,600, and support level is at 4,540-4,550, as we can see on the 15-minute chart:

Concluding, the broad stock market remained within a short-term consolidation on Monday, as investors continued to hesitate following recent move up. There have been no confirmed medium-term negative signals so far. However, we continue to maintain our 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.

Due to a holiday break, beginning from this Thursday until Wednesday, August 19, there will be no Stock Trading Alerts. We apologize for inconvenience.

As stated above, we continue to maintain our short position for the coming two weeks. The stop-loss remains at 2,140, and potential profit target is at 1,980 (S&P 500 index). If the broad stock market breaks down below the support level of 2,040, we may consider moving our stop-loss to the level of 2,060, just to protect gains. Then, if the market continues its downtrend below the level of 2,000, the stop-loss level may be lowered further, to 2,040. We may even consider moving potential profit target lower, down to 1,900 (S&P 500 index).

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts