Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,210, and profit target at 2,050, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook is now neutral, following S&P 500 index breakout above last year's all-time high:

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

The U.S. stock market indexes gained 0.3-0.4% on Monday, slightly extending their short-term uptrend, as investors' sentiment remained bullish. The S&P 500 index has reached yet another new all-time high at the level of 2,193.81. The nearest important level of resistance is at around 2,200. On the other hand, support level is at 2,170, marked by short-term local lows. The next support level  remains at 2,150. Will the market continue higher? Or is this some kind of a topping pattern before downward reversal? There have been no confirmed negative signals so far:

Expectations before the opening of today's trading session are slightly negative, with index futures currently down 0.2%. The main European stock market indexes have lost 0.3-0.5% so far. Investors will now wait for some important economic data announcements: Consumer Price Index, Building Permits, Housing Starts at 8:30 a.m., Industrial Production, Capacity Utilization at 9:15 a.m. The S&P 500 futures contract trades within an intraday consolidation, following yesterday's downward correction within a short-term uptrend. The nearest important level of support remains at 2,175-2,180, marked by some recent local lows. On the other hand, resistance level is at 2,190-2,120, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract follows a similar path, as it currently trades along the level of 4,820, following yesterday's fluctuations. The nearest important level of resistance is at around 4,830-4,840, marked by new all-time high. On the other hand, support level is at 4,800, among others, as the 15-minute chart shows:

Concluding, the broad stock market reached new all-time high yesterday, as the S&P 500 index got closer to 2,200 mark. We still can see technical overbought conditions accompanied by bearish divergences. Therefore, we continue to maintain our speculative short position (opened on July 18th at 2,162, S&P 500 index). Stop-loss level is at 2,210 and potential profit target is at 2,050 (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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