Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,050, and profit target at 1,900, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish, as we expect a downward correction or short-term uptrend's reversal at some point. 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): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): bearish
Long-term outlook (next year): neutral

The U.S. stock market indexes were mixed between -0.1% and +0.9% on Thursday, extending their short-term uptrend, as investors reacted to economic data releases. The S&P 500 index broke above resistance level of 2,040, marked by the early January daily gap down of 2,038.20-2,043.62. The next important level of resistance is at around 2,080, marked by the late December local high of 2,081.56. On the other hand, support level remains at 2,000 mark, and the next support level is at 1,960-1,980, marked by previous level of resistance. There have been no confirmed negative signals so far. However, we can see some technical overbought conditions. Is this a new uptrend leading to last year's all-time high or just an upward correction following January sell-off? For now, it looks like a move up within a medium-term descending trading channel:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.2%. The European stock market indexes have been mixed so far. Investors will now wait for the Michigan Sentiment number announcement at 10:00 a.m. The S&P 500 futures contract trades within an intraday consolidation, following yesterday's advance. The nearest important level of resistance is at around 2,035, marked by local high. On the other hand, support level is at around 2,020-2,025, among others. Will the uptrend continue even higher? There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions:

The technology Nasdaq 100 futures contract is relatively weaker than the broad stock market, as it currently trades below its recent high, following yesterday's consolidation. The nearest important level of resistance is at around 4,400-4,410. On the other hand, support level is at 4,360-4,380. Is this some sort of a short-term topping pattern?

Concluding, the broad stock market extended its short-term uptrend yesterday, as the S&P 500 broke above the early January daily gap down. It has retraced most of its January sell-off. But will it continue higher despite some technical overbought conditions?  There have been no confirmed short-term negative signals so far. Our speculative position has almost been closed yesterday at the stop-loss level of 2,050 (S&P 500 index). We continue to maintain this short position (opened on March 7th at 1,995, S&P 500 index). We expect a downward correction or uptrend reversal at some point. Stop-loss level remains at 2,050, marked by the above-mentioned daily gap down resistance level, and potential profit target is at 1,900 (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
Stock Trading Alerts