Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,210, and profit target at 2,050, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook is now neutral, following S&P 500 index breakout above last year's all-time high:

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): neutral

The U.S. stock market indexes lost 0.1-0.2% on Thursday, slightly extending their recent downtrend, as investors reacted to economic data releases, among others. The S&P 500 index continues to trade within a short-term consolidation following its June - July rally. It is still relatively close to last week's new all-time high of 2,193.81. The nearest important level of resistance is at around 2,190-2,200. On the other hand, support level is at 2,165-2,170, marked by short-term local lows. The next support level remains at 2,150. Will the market continue higher? Or is this some kind of a topping pattern before downward reversal? There have been no confirmed negative signals so far:

Expectations before the opening of today's trading session are virtually flat. The European stock market indexes have been mixed so far. Investors will now wait for some economic data announcements: GDP - Second Estimate number at 8:30 a.m., Michigan Sentiment - Final at 10:00 a.m. They will also wait for the Fed's Janet Yellen's speech at the Jackson Hole Summit. The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates along the level of 2,175. The nearest important level of support is at around 2,165-2,170, and resistance level is at 2,180-2,190, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract follows a similar path, as it continues to trade along the level of 4,780. The nearest important level of resistance is at 4,800 mark. On the other hand, support level remains at around 4,770, among others, as the 15-minute chart shows:

Concluding, the broad stock market slightly extended its recent move down yesterday. However, it continues to trade within a few-week long consolidation. We still can see overbought conditions accompanied by negative technical divergences. Therefore, we continue to maintain our speculative short position (opened on July 18th at 2,162, S&P 500 index). Stop-loss level is at 2,210 and potential profit target is at 2,050 (S&P 500 index). 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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