Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140 and profit target at 1,990, S&P 500 index)
Our intraday outlook is bearish, and our short-term outlook is bearish:
Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): bearish
Long-term outlook (next year): bullish
The U.S. stock market indexes lost between 1.4% and 1.7% on Thursday, extending their Wednesday's decline, as investors reacted to European Central Bank's announcement, among others. Our yesterday's negative intraday outlook has proved accurate. The S&P 500 index broke below support level of 2,070, marked by previous local low. The next important level of support is at 2,020-2,050. For now, it looks like a consolidation following October rally:
Expectations before the opening of today's trading session are positive, with index futures currently up 0.3-0.4%. The main European stock market indexes have lost 0.1-04% so far. Investors will now wait for the important economic data announcements: Nonfarm Payrolls, Unemployment Rate, Trade Balance at 8:30 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it retraces some of its yesterday's selloff. The nearest important level of resistance is at around 2,060-2,070, and support level is at 2,040, marked by local low, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it currently trades along the level of 4,620. The nearest important level of support is at 4,580-4,600, and resistance level is at 4,630-4,650, among others, as we can see on the 15-minute chart:
Concluding, the broad stock market extended its short-term downtrend yesterday, as the S&P 500 index got further away from resistance level of 2,100. We continue to maintain our speculative short position (2,088.35, S&P 500 index). Stop-loss is at 2,140 and potential profit target is at 1,990 (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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