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 0.2-0.3% on Tuesday, further extending their short-term fluctuations along the level of 2,100. The S&P 500 index remains within its medium-term consolidation. The nearest important level of resistance is at around 2,110-2,115, marked by recent local highs, and the next resistance is at 2,130-2,135, marked by late May all-time high. On the other hand, support level is at 2,090, marked by local lows, and the next level of support is at 2,040-2,060:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.3-0.4%. The main European stock market indexes have gained 0.3-1.2% so far. Investors will now wait for some economic data announcements: ADP Employment Change report at 8:15 a.m., Trade Balance at 8:30 a.m., ISM Services at 10:00 a.m., Crude Inventories at 10:30 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend following yesterday's move down. The nearest important level of resistance is at around 2,090-2,100, 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 retraces yesterday's decline. The nearest important level of resistance is at around 4,580-4,600, and support level remains at 4,530-4,550, marked by recent local lows, as we can see on the 15-minute chart:

Concluding, the broad stock market extended its short-term fluctuations on Tuesday. 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 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