Briefly: In our opinion, no speculative positions are justified.

Our intraday outlook is neutral, and our short-term outlook is neutral. Our medium-term outlook remains bearish, as the S&P 500 index extends its lower highs, lower lows sequence. We decided to change our long-term outlook to neutral recently, following a move down below medium-term lows:

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

The main U.S. stock market indexes lost 1.1-1.6% on Monday, extending their last week's sell-off, as investors reacted to oil prices, global stock markets decline. The S&P 500 index got close to its mid-January low of 1,812.29, before bouncing off support level at around 1,800-1,850. It broke below recent consolidation at the level of 1,900, which is a negative signal. However, it remains within a wider consolidation following January move down. Is this some kind of a bottoming pattern or just relatively flat correction within  medium-term downtrend? The nearest important level of resistance is at 1,870-1,900, marked by previous support level. Last year's August - September lows continue to act as a medium-term support level. However, there have been no confirmed positive signals so far:

Expectations before the opening of today's trading session are negative, with index futures currently down 0.4-0.5%. The main European stock market indexes have lost 0.2-0.9% so far. Investors will now wait the Wholesale Inventories number release at 10:00 a.m. The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates along the level of 1,850. The nearest important level of resistance is at around 1,855, marked by local highs. On the other hand, support level remains at 1,820-1,830. For now, it looks like another upward correction following recent move down, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract trades along the level of 3,950. The technology index extended its downtrend yesterday, as it broke below last year's August low. The nearest important support level remains at 3,880-3,900, and level of resistance is at 4,000, among others. It looks like a correction within short-term downtrend, as we can see on the 15-minute chart:

Concluding, the broad stock market extended its short-term downtrend yesterday, as investors' sentiment further worsened. Will the S&P 500 index break below its mid-January low of 1,812.29? Or is this just a volatile bottoming consolidation before some more meaningful medium-term downtrend's reversal? For now, the index continues to trade along its last year's August - September local lows, as they act as a medium-term level of support. However, there have been no confirmed buy signals so far. We still prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.

Thank you.

Paul Rejczak
Stock Trading Strategist
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