Briefly: In our opinion, no speculative positions are justified.
Our intraday outlook remains neutral, and our short-term outlook is neutral:
Intraday
(next 24 hours) outlook: neutral
Short-term (next 1-2 weeks) outlook: neutral
Medium-term (next 1-3 months) outlook: neutral
Long-term outlook (next year): bullish
The main U.S. stock market indexes lost between 1.6% and 1.9% on Monday, extending their recent move down, as investors reacted to worsening global economic conditions. The S&P 500 index broke below support level of 2,050, which is negative. The nearest important support level is at around 2,015-2,020, marked by the December 18th daily gap up of 2,016.8-2,019.0. On the other hand, resistance level is at 2,040-2,050, among others. For now, it looks like a volatile medium-term consolidation following last year’s October-November rally, as we can see on the daily chart:
Expectations before the opening of today’s trading session are slightly negative, with index futures currently down 0.1-0.2%. The European stock market indexes have lost 0.2-1.3% so far. Investors will now wait for some economic data announcements: Factory Orders, ISM Services number at 10:00 a.m. The S&P 500 futures contract (CFD) is in an intraday consolidation, following yesterday’s sell-off. The nearest important level of support is at 2,000-2,010. On the other hand, resistance level remains at 2,020-2,025, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path as it trades along the level of 4,150. There have been no confirmed short-term positive signals so far, however, we can see some oversold conditions:
Concluding, the broad stock market extended its sell-off on Friday, as investors reacted to further oil prices crash, among others. For now, it looks like a correction within an uptrend or a volatile consolidation following last year’s October-November rally. Therefore, we 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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