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. We decided to change our long-term outlook to neutral recently, following a move down below medium-term lows:

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 0.3-1.1% on Thursday, retracing some of their recent move up, as investors reacted to economic data releases. The S&P 500 index bounced off resistance level at around 1,930-1,950, marked by its early February local high, among others. On the other hand, support level is at 1,890-1,900, marked by Wednesday's daily gap up of 1,895.77-1,898.80. The next support level is at 1,870, marked by Tuesday's daily gap up. For now, it looks like a consolidation following first half of January sell-off. Will it continue downwards? Or is the bullish downtrend's reversal scenario currently in play? Last year's August - September lows continue to act as medium-term support level, as we can see on the daily chart:

Expectations before the opening of today's trading session are negative, with index futures currently down 0.2-0.3%. The main European stock market indexes have lost 0.4-0.7% so far. Investors will now wait for the Consumer Price Index number announcement at 8:30 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it extends its yesterday's decline. The nearest important level of resistance is at around 1,930, marked by local highs. On the other hand, support level remains at 1,900-1,910. For now, it looks like a downward correction within recent uptrend:

The technology Nasdaq 100 futures contract follows a similar path, as it retraces some of its recent move down. The nearest important level of resistance remains at around 4,200-4,220, marked by yesterday's local high, among others. On the other hand, support level is at 4,050-4,100, marked by previous consolidation. Is this an uptrend reversal or just a downward correction before another leg up?

Concluding, the broad stock market retraced some of its Wednesday's move up yesterday, as investors took short-term profits off the table. The S&P 500 index trades along its last year's August - September local lows, as they act as medium-term level of support. There have been no confirmed short-term negative signals so far. For now, it looks like a downward correction following recent advance. However, we can see some short-term overbought conditions. Our speculative long position has been closed at the opening of yesterday's cash market trading session (1,925, Thursday's average opening price of the S&P 500 index). Overall, we gained 90 index points on that trade. Currently, we 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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