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 gained 1.3-1.5% on Friday, retracing their recent decline, as investors reacted to better-than-expected monthly jobs report release. The S&P 500 index got closer to its April 27 all-time high of 2,125.92. The nearest important resistance level is at around 2,120-2,125, and level of support is at 2,100, among others. 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 been mixed between -1.3% and +0.3%. The S&P 500 futures contract (CFD) trades within an intraday consolidation, as it fluctuates following Friday's rally. The nearest important level of support is at 2,100, and resistance level is at 2,110, among others, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it fluctuates in a relatively narrow trading range. However, it remains relatively weaker than the broad stock market. The nearest important level of resistance is at 4,450-4,460, as we can see on the 15-minute chart:
Concluding, the broad stock market has managed to retrace most of its recent move down on Friday, as investors reacted to economic data announcements. 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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