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 U.S. stock market indexes lost 0.3-0.5% on Monday, retracing some of their Friday's move up, as investors took short-term profits off the table. The S&P 500 index continues to trade close to its last year's November - December local highs. The nearest important level of resistance is at around 2,080, marked by the late December high of 2,081.56, and the next resistance level is at 2,100-2,120. On the other hand, support level remains at 2,055-2,060, marked by last week's Wednesday's daily gap up of 2,055.91-2,058.27. The next support level is at 2,000, marked by previous level of resistance. There have been no confirmed negative signals so far. However, we can see technical overbought conditions. The index continues to trade within a slightly descending medium-term trading channel, as the daily chart shows:

Expectations before the opening of today's trading session are negative, with index futures currently down 0.6-0.7%. The main European stock market indexes have gained 1.4-2.1% so far. Investors will now wait for some economic data announcements: Trade Balance at 8:30 a.m., ISM Services at 10:00 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it retraces its Friday's move up. The nearest important level of resistance is at around 2,050, marked by previous support level. The nearest important level of support is at 2,030-2,035, marked by previous local low, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract follows a similar path, as it retraces its recent advance. The market trades below the level of 4,500 again. The nearest important resistance level is at around 4,500, and potential support level is at 4,440-4,450, marked by previous local low. Is this a topping pattern or just consolidation following short-term uptrend?

Concluding, the broad stock market fluctuated following recent advance, as the S&P 500 index got close to its late December local high. Will it break above the crucial long-term resistance level of 2,100-2,150 this time? Or is this just an upward move within a slightly descending medium-term trading channel? We can see some short-term technical overbought conditions. However, there have been no confirmed negative signals. We still 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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