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 main U.S. stock market indexes were mixed between -0.5% and 0.0% on Friday, extending their short-term uncertainty, as investors reacted to economic data announcements, among others. The S&P 500 index remains within a consolidation following recent 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 positive, with index futures currently up 0.4%. The European stock market indexes have gained 0.8-1.4% so far. Investors will now wait for the NAHB Housing Market Index release at 10:00 a.m. The S&P 500 futures contract trades within an intraday uptrend, as it retraces its Friday's move down. The nearest important level of resistance is at around 2,140-2,150, marked by short-term local high. On the other hand, support level remains at 2,120, among others:

The technology Nasdaq 100 futures contract is relatively stronger than the broad stock market, as it currently trades close to its September's all-time high. The nearest important level of resistance is at around 4,840-4,850. On the other hand, support level remains at around 4,800-4,820, marked by previous resistance level, as the 15-minute chart shows:

Concluding, the broad stock market extends its consolidation following recent breakdown below two-month-long fluctuations. There have been no confirmed positive signals so far. 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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