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 were mixed between -0.2% and +0.3% on Monday, as investors hesitated following recent move down. The S&P 500 index continues to trade along the level of 2,050. The nearest important level of support is at around 2,030-2,040, marked by some previous local lows. The next important support level is at 2,000-2,020. On the other hand, resistance level is at 2,060, marked by last week's consolidation. Is this the end of two-month long uptrend? Or is it just a correction before another leg up reaching last year's all-time high? Last year's highs along the level of 2,100 continue to act as medium-term resistance level, as we can see on the daily chart:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.5-0.6%. The European stock market indexes have gained 0.8-1.1% so far. Investors will now wait for the Wholesale Inventories number release at 10:00 a.m. The S&P 500 futures contract trades within an intraday uptrend following a breakout above resistance level of 2,060. The nearest important level of resistance is at around 2,070-2,080, marked by previous local highs. On the other hand, support level is at 2,045-2,050, among others. Is the market breaking above its short-term descending trading channel?

The technology Nasdaq 100 futures contract follows a similar path, as it extends its Friday's rebound. The nearest important level of resistance is at around 4,380-4,400, marked by local highs. On the other hand, support level remains at 4,300-4,320, among others. For now, it looks like an upward correction following late April - early May decline:

Concluding, the broad stock market retraced some of its last week's move down yesterday, before closing virtually flat. The S&P 500 index remains relatively close to its last year's medium-term highs along the level of 2,100. Is this just a downward correction following over two-month long rally or new medium-term downtrend? The S&P 500 index continues to trade above its late March - early April local lows. It still looks like a downward correction, so 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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