Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,060 and profit target at 1,900, 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 gained between 0.5% ad 0.7% on Monday, retracing their last week's decline, as investors hunted bargains. The S&P 500 index bounced off support level of 2,000. On the other hand, level of resistance remains at around 2,040-2,060. There have been no confirmed short-term positive signals so far. It looks like an upward correction following recent move down:
Expectations before the opening of today's trading session are positive, with index futures currently up 0.4-0.5%. The main European stock market indexes have gained 1.6-2.3% so far. Investors will now wait for some economic data announcements: Consumer Price Index, Empire Manufacturing number at 8:30 a.m., NAHB Housing Market Index at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it retraces some of its recent move down. The nearest important level of resistance is at around 2,030, and support level is at 1,990-2,010, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it retraces some of its recent downtrend. The nearest important level of resistance is at around 4,600. On the other hand, support level is at 4,550-4,560, among others, as we can see on the 15-minute chart:
Concluding, the broad stock market retraced a part of its recent move down, as the S&P 500 index bounced off support level of 2,000. We continue to maintain our already profitable speculative short position (2,088.35, S&P 500 index). The stop-loss level remains at 2,060 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
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