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 gained 1.5-1.9% on Thursday, extending their short-term move up, as investors reacted to ECB’s Quantitative Easing policy announcement. The S&P 500 index retraced its early January decline, as it reached resistance level at around 2,060-2,065, marked by previous local highs. The next important level of resistance is at around 2,090-2,100, marked by December 29th all-time high of 2,093.55. On the other hand, support level is at around 2,020-2,040. There have been no confirmed short-term negative signals so far, however, the index remains within medium-term consolidation following November-December rally:
Expectations before the opening of today’s trading session are virtually flat, with index futures up 0.1%. The European stock market indexes have gained 0.4-1.6% so far. Investors will now wait for some economic data announcements: Existing Home Sales, Leading Indicators at 10:00 a.m. The S&P 500 futures contract (CFD) is in an intraday consolidation following yesterday’s move up. The nearest important level of resistance is at around 2,060. On the other hand, support level remains at 2,050, among others, as we can see on the 15-minute chart:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it is in an intraday consolidation. For now, it looks like a flat correction following short-term rally. The nearest important level of support is at around 4,230, marked by previous consolidation, as the 15-minute chart shows:
Concluding, the broad stock market rallied yesterday, as investors reacted to European Central Bank’s new monetary easing policy announcement. It still looks like a volatile medium-term consolidation following last year’s October-November rally. 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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