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 main U.S. stock market indexes gained 0.2-0.6% on Monday, extending their short-term fluctuations, as investors continued to hesitate following June - July rally. The S&P 500 index is still relatively close to its recent 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 2,160-2,170, 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 slightly negative, with index futures currently down 0.1-0.3%. The European stock market indexes have gained 0.1-0.8% so far. Investors will now wait for some economic data releases: Case-Shiller 20-city Index number at 9:00 a.m., Consumer Confidence at 10:00 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it retraces some of its yesterday's advance. The nearest important level of resistance is at around 2,180, marked by local highs. On the other hand, support level is at around 2,160, among others, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract follows a similar path, as it retraces most of its yesterday's move up, following negative Apple's news announcement. The nearest important level of support is at around 4,760-4,770. On the other hand, resistance level remains at around 4,800, as the 15-minute chart shows:

Concluding, the broad stock market retraced its recent move down yesterday, as the S&P 500 index got closer to its all-time high again. Will it continue its long-term uptrend following few-week-long consolidation? Or is this a topping pattern? 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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