Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,180, and profit target at 2,020, 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 main U.S. stock market indexes lost 0.6-0.7% on Tuesday, extending their short-term move down, as investors reacted to economic data, quarterly earnings releases. The S&P 500 index broke slightly below its September - October local lows. The nearest important support level is at around 2,100-2,110, marked by some previous medium-term local highs. On the other hand, resistance level is at 2,120, and the next resistance level is at 2,150 marked by last months's local highs, as we can see on the daily chart:
Expectations before the opening of today's trading session are virtually flat. The European stock market indexes have lost 0.3-0.9% so far. Investors will now wait for some economic data announcements: ADP Employment Change report at 8:15 a.m., Crude Inventories number at 10:30 a.m., and finally, the FOMC Rate Decision release at 2:00 p.m. The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates following yesterday's decline. The nearest important level of support remains at around 2,090-2,100, marked by yesterday's local low, among others. On the other hand, resistance level is at 2,110-2,120, among others. There have been no confirmed short-term positive signals so far:
The technology Nasdaq 100 futures contract follows a similar path, as it currently trades within an intraday consolidation, after yesterday's sell-off. The nearest important level of support is at around 4,700-4,720. On the other hand, resistance level is at 4,780-4,800, marked by previous support level, as the 15-minute chart shows:
Concluding, the broad stock market extended its short-term downtrend on Tuesday, as the S&P 500 index traded lowest since early July. We continue to maintain our speculative short position (opened on July 18th at 2,162, S&P 500 index). However, on Friday we decided to move our stop-loss level from 2,210 down to 2,180 (S&P 500 index). We also decided to move our potential profit target level from 2,050 down to 2,020 (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 d
Thank you.
Paul Rejczak
Stock Trading Strategist
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