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 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 lost between 0.2% and 0.4% on Monday, retracing some of their recent move up, as investors took short-term profits off the table. The S&P 500 index has managed to reach yet another new all-time high at the level of 2,125.92. The nearest important level of support is at around 2,100, marked by previous resistance level. There have been no confirmed negative signals so far, however, we can see negative technical divergences:
Expectations before the opening of today's trading session are virtually flat, with index futures currently down 0.1%. The main European stock market indexes have lost 0.7-1.0% so far. Investors will now wait for some economic data announcements: Case-Shiller 20-city Index at 9:00 a.m., Consumer Confidence at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday consolidation, following yesterday's decline. The nearest important level of support is at around 2,100, and resistance level is at 2,110-2,120, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades along the level of 4,520. The nearest important level of support is at around 4,500-4,510, and resistance level is at 4,530-4,550, as we can see on the 15-minute chart:
Concluding, the S&P 500 index retraced some of its recent move up, as investors took short-term profits off the table. There have been no confirmed negative signals so far. However, we continue to maintain our speculative short position (2,098.27, S&P 500 index), as 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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