Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,090 and profit target at 1,980, S&P 500 index)
Our intraday outlook is bearish, and our short-term outlook is bearish:
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): bullish
The U.S. stock market indexes gained 1.3-1.4% on Monday, retracing their last week's move down, as investors hunted down bargains. The S&P 500 index broke above its short-term consolidation along the level of 2,040-2,050. The nearest important resistance level is at around 2,090-2,100, marked by some previous local extremes. For now, it looks like a correction within a short-term downtrend:
Expectations before the opening of today's trading session are slightly negative, with index futures currently down 0.2-0.3%. The European stock market indexes have been mixed so far. Investors will now wait for some economic data announcements: Building Permits, Housing Starts at 8:30 a.m. The S&P 500 futures contract (CFD) is within an intraday downtrend, as it trades below yesterday's consolidation. The nearest important resistance level is at around 2,070-2,075. On the other hand, support level is 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 retraces some of its yesterday's move up. The nearest important level of resistance is at around 4,360, and support level is at 4,320-4,330, marked by recent consolidation, as the 15-minute chart shows:
Concluding, the broad stock market retraced its last week's move down, as it bounced off support level. For now, it looks like a correction within a downtrend. Therefore, we continue to maintain our speculative short position (opened on February 18 at 2,099.16, S&P 500 index), as we expect some more downside. Stop-loss level is at 2,090 (S&P 500 index) and potential profit target is at 1,980. 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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