Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, and profit target at 1,980, S&P 500 index)
Our intraday outlook is now 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 were mixed between -0.5% and +0.4% on Tuesday, extending their short-term consolidation, as investors reacted to some further quarterly corporate earnings releases. Our yesterday's neutral intraday outlook has proved accurate. The S&P 500 index remains relatively close to its February 25 all-time high of 2,119.59. The nearest important level of resistance is at around 2,110-2,120. On the other hand, support level is at 2,070-2,080, marked by recent local lows. There is no clear medium-term direction, as we can see on the daily chart:
Expectations before the opening of today's trading session are negative, with index futures currently down 0.4-0.5%. The main European stock market indexes have lost 0.6-1.0% so far. Investors will now wait for some economic data announcements: MBA Mortgage Index at 7:00 a.m., FHFA Housing Price Index at 9:00 a.m., Existing Home Sales at 10:00 a.m., Crude Inventories at 10:30 a.m. The S&P 500 futures contract (CFD) trades lower, following a quick selloff below yesterday's lows. The nearest important level of support is at around 2,080, and resistance level is at 2100, among others:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades lower today morning. The nearest important level of support is at around 4,400, and resistance level is at 4,430-4,450, as the 15-minute chart shows:
Concluding, the broad stock market extended its short-term uncertainty yesterday. There have been no confirmed negative signals so far. However, we decided to open a speculative short position at the open of today's trading session (S&P 500 index). We expect a downward correction or an uptrend reversal. Stop-loss is at 2,140, 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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