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 0.5% on Monday, retracing some of their recent advance, as investors took short-term profits off the table. Our yesterday's bearish intraday outlook has proved accurate. The S&P 500 index bounced off resistance level at around 2,120-2,125, marked by April 27 all-time high of 2,125.92, among others. On the other hand, level of support is at 2,090-2,100. 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 negative, with index futures currently down 0.7-0.8%. The main European stock market indexes have lost 1.8-2.2% so far. The S&P 500 futures contract (CFD) trades within an intraday downtrend, as it retraces last week's move up. The nearest important resistance level is at 2,090-2,100. On the other hand, support level is at 2,060-2,070, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it continues its yesterday's decline. The nearest important level of support is at 4,340-4,370, marked by previous consolidation, as we can see on the 15-minute chart:
Concluding, the broad stock market is in a short-term downtrend, following last week's rebound. 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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