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 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 lost 0.3% on Thursday, extending their short-term downtrend, as investors reacted to economic data releases, among others. The S&P 500 broke slightly below its September low, before bouncing back. Is this a new downtrend or just more consolidation following June - July rally? The nearest important level of resistance is at around 2,140-2,150, marked by previous support level. The next resistance level is at 2,170, among others. On the other hand, support level is at around 2,120, marked by September local low. The market trades along medium-term upward trend line, as the daily chart shows:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.4-0.5%. The European stock market indexes have gained 0.8-1.9% so far. Investors will now wait for some economic data announcements: Producer Price Index, Retail Sales at 8:30 a.m., Business Inventories, Michigan Sentiment at 10:00 a.m. The S&P 500 futures contract trades within an intraday uptrend, as it retraces some of its recent move down. The nearest important support level remains at around 2,100-2,120. On the other hand, resistance level is at 2,140, marked by local highs, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract follows a similar path, as it retraces its recent decline. The nearest important level of resistance is at around 4,830-4,840, marked by local highs. On the other hand, support level remains at 4,750-4,800. Is this a new uptrend or just upward correction within a downtrend?

Concluding, the broad stock market extended its short-term downtrend yesterday, as the S&P 500 index broke slightly below its September low. Will the downtrend reverse following yesterday's rebound? Or is this just upward correction within a downtrend? 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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