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 between 1.0% and 1.6% on Thursday, retracing some more of their recent decline, as investors reacted to economic data announcements, among others. The S&P 500 index remains within a short-term consolidation following last Friday's move down. It continues to trade below its two-month-long consolidation following June - July rally. Is this a new downtrend or just quick downward correction? The nearest important level of resistance is at around 2,170, marked by Friday's daily gap down of 2,169.08-2,177.49. On the other hand, support level is at 2,120-2,130, marked by recent local lows, as we can see on the daily chart:

Expectations before the opening of today's trading session are negative, with index futures currently down 0.4%. The European stock market indexes have lost 0.2-1.0% so far. Investors will now wait for some economic data announcements: Consumer Price Index at 8:30 a.m., Michigan Sentiment number at 10:00 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it retraces some of its yesterday's advance. The nearest important support level is at around 2,100-2,120. On the other hand, resistance is at 2,140-2,160, marked by recent local highs, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract follows a similar path, as it retraces some of yesterday's rally. However, it remains relatively stronger than the broad stock market, as it trades closer to all-time high. The nearest important level of support is at 4,770-4,7780, marked by short-term local highs. On the other hand, resistance level is at 4,820-4,840. There have been no confirmed negative signals so far:

Concluding, the broad stock market extended its short-term fluctuations on Thursday, following series of economic data releases. For now, it looks like consolidation within a downtrend. 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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