Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, and profit target at 1,980, 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): neutral
Long-term outlook (next year): bullish
The U.S. stock market indexes lost between 0.6% and 0.8% on Monday, as investors continued to take profits off the table. Our yesterday's bearish intraday outlook has proved accurate. The S&P 500 index extended its short-term downtrend, as it fell below support level of 2,080. The nearest important level of resistance is at around 2,080-2,100, and the next support level is at 2,040-2,050, marked by March lows:
Expectations before the opening of today's trading session are positive, with index futures currently up 0.5%. The main European stock market indexes have gained 0.8-1.5% so far. Investors will now wait for some economic data announcements: Case-Schiller 20-city Index at 9:00 a.m., Consumer Confidence at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it retraces yesterday's move down. The nearest important level of resistance is at around 2,080, as we can see on the 15-minute chart:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it bounces off support level of 4,500. The nearest important level of resistance is at 4,550-4,570, as the 15-minute chart shows:
Concluding, the broad stock market continued its short-term downtrend on Monday, as investors reacted to global stock exchanges retreat, among others. There have been no confirmed medium-term negative signals so far. However, we continue to maintain our speculative short position (2,098.27, S&P 500 index), as we expect a medium-term downward correction or an uptrend reversal. Stop-loss is at 2,140, and potential profit target is at 1,980. 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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