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

Our intraday outlook is 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 gained between 0.7% and 0.9% on Monday, retracing some of their last week's decline, as investors reacted to economic data, quarterly earnings releases. The S&P 500 index continues to trade within a short-term consolidation following two-month long rally. The nearest important level of support is at around 2,050, marked by Friday's local low, among others. On the other hand, resistance level is at 2,070-2,075, marked by the recent consolidation. The next level of resistance remains at 2,100-2,115, marked by last year's medium-term local highs. Is this the end of two-month long uptrend? Or is this just a correction before another leg up reaching last year's all-time high? We still can some see technical overbought conditions:

Expectations before the opening of today's trading session are negative, with index futures currently down 0.6-0.7%. The European stock market indexes have lost 1.2-1.5% so far. The S&P 500 futures contract trades within an intraday downtrend, as it retraces its yesterday's advance. The nearest important level of support is at 2,045-2,050, marked by Friday's local low. On the other hand, resistance level is at 2,070-2,075, marked by recent fluctuations. The market extends its slightly descending short-term trading channel, 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 support remains at 4,300-4,330, among others. There have been no confirmed short-term positive signals so far. The market continues to fluctuate along the level of 4,300, as the 15-minute chart shows:

Concluding, the broad stock market retraced some of its recent move down on Monday. Is this just a short-term upward correction before another leg down? We still can see technical overbought conditions that may lead to uptrend's reversal or downward correction. However, there have been no confirmed negative signals so far. For now, it looks like a relatively flat correction within two-month-long medium-term uptrend. 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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