Briefly: In our opinion, no speculative positions are justified.

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

Intraday outlook (next 24 hours): neutral
Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): bearish
Long-term outlook (next year): neutral

The main U.S. stock market indexes were mixed between -0.6% and 0.0% on Thursday, extending their short-term consolidation, as investors took profits off the table. The S&P 500 index got back below the level of 2,100 again, bouncing off resistance level at around 2,100-2,115, marked by last year's medium-term local highs. The next important level of resistance is at 2,120-2,135, marked by last year's May S&P 500's all-time high of 2,134.72. On the other hand, support level remains at 2,065-2,070, marked by recent consolidation. There have been no confirmed negative signals so far. However, we can see some technical overbought conditions. But will the market break above its last year's all-time high? For now, it looks like a short-term consolidation within an uptrend:

Expectations before the opening of today's trading session are mixed between -0.1% and +0.2%. The main European stock market indexes have lost 0.2-0.6% so far. The S&P 500 futures contract trades within an intraday consolidation, following yesterday's decline. The nearest important level of resistance is at around 2,090, marked by local highs. On the other hand, support level is at 2,075, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract trades within an intraday consolidation, following yesterday's after-hours sell-off. Investors reacted negatively to quarterly corporate earnings releases, sending the contract price below 4,500 mark. The nearest important level of resistance is at around 4,500. On the other hand, support level remains at around 4,475 mark, as the 15-minute chart shows:

Concluding, the broad stock market trades within a short-term consolidation, following its recent rally. The S&P 500 index remains relatively close to its last year's medium-term local highs. We still can see technical overbought conditions that may lead to uptrend's reversal or downward correction. However, there have been no confirmed short-term negative signals so far. Our speculative short position has been closed at the stop-loss level of 2,100 on Tuesday (S&P 500 index; the S&P 500 futures contract has reached its pre-session high at the level of 2,098 - 10 points above yesterday's daily high). We lost 54.44 index points on that trade, betting against over two-month-long uptrend. 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. Currently, we prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.

Thank you.

Paul Rejczak
Stock Trading Strategist
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