Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140 and profit target at 1,990, 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): bearish
Long-term outlook (next year): bullish
The main U.S. stock market indexes lost 1.2-1.9% on Friday, extending their short-term downtrend, as investors reacted to economic data announcements. The S&P 500 index got closer to the level of 2,000, as it broke below support level of 2,040. The nearest important level of resistance is at around 2,040-2,050. On the other hand, support level is at 2,020, and the next support level is at 1,990-2,000. There have been no confirmed short-term positive signals so far:
Expectations before the opening of today's trading session are positive, with index futures currently up 0.2%. The European stock market indexes have gained 0.1-0.3%. so far. Investors will now wait for the Empire Manufacturing number release at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, following lower opening after Friday's Paris terrorist attacks. The nearest important level of support is at around 2,000, and resistance level is at 2,040, among others, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it bounces off support level. The nearest important level of support is at 4,450-4,470, and resistance level is at 4,550-4,600, as we can see on the 15-minute chart:
Concluding, the broad stock market extended its short-term downtrend on Friday, following economic data releases. We expect a downward correction or short-term uptrend reversal. Therefore, we continue to maintain our already profitable speculative short position (2,088.35, S&P 500 index). Stop-loss is at 2,140 and potential profit target is at 1,990 (S&P 500 index). 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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