Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,100, and profit target at 1,950, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook remains bearish, as the S&P 500 index extends its lower highs, lower lows sequence:

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): neutral

The U.S. stock market indexes were virtually flat on Thursday, following recent rally, as investors took some short-term profits off the table. The S&P 500 index slightly extended its uptrend, as it remained above its late December local high. The next resistance level is at 2,100-2,120. On the other hand, support level is at 2,030-2,040, marked by recent consolidation, and the next level of support is at 2,000-2,020, marked by previous level of resistance. The index continues to trade within a descending medium-term trading channel. There have been no confirmed short-term negative signals so far. However, we can see some overbought conditions:

Expectations before the opening of today's trading session are negative, with index futures currently down 0.2-0.3%. The European stock market indexes have lost 0.4-0.6% so far. Investors will wait for some economic data announcements: Empire Manufacturing number at 8:30 a.m., Industrial Production along with Capacity Utilization at 9:15 a.m., Michigan Sentiment at 10:00 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it retraces some of its recent rally. The nearest important level of resistance is at around 2,080, marked by yesterday's local high. On the other hand, support level is at 2,065-2,070, marked by some local lows, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract follows a similar path, as it retraces its yesterday's move up. The nearest important level of resistance is at 4,550-4,560, and support level is at 4,500-4,520, among others. There have been no confirmed negative signals so far. For now, it looks like a consolidation following an uptrend, as the 15-minute chart shows:

Concluding, the broad stock market fluctuated on Thursday, following recent rally. The S&P 500 index broke above its consolidation along the level of 2,050 recently. We still can see technical overbought conditions that may lead to uptrend's reversal or downward correction at some point. Therefore, we continue to maintain our speculative short position (opened at 2,045.56 - last week's Wednesday's opening price of the S&P 500 index). Stop-loss level is at 2,100 and potential profit target is at 1,950 (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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