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 2.0-2.3% on Monday, as investors reacted to Greece debt crisis news releases. Our yesterday's bearish intraday outlook has proved accurate. The S&P 500 index broke below the support level of 2,070-2,080, marked by previous local lows. The nearest important level of support is at 2,040-2,050, marked by March local lows. On the other hand, resistance level is at 2,070-2,080, as we can see on the daily chart:
Expectations before the opening of today's trading session are positive, with index futures currently up between 0.2% and 0.4%. The main European stock market indexes have been mixed so far. Investors will now wait for some economic data announcements: Case-Shiller 20-city Index at 9:00 a.m., Chicago PMI at 9:45 a.m., Consumer Confidence at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it retraces some of yesterday's decline. The nearest important level of support remains at around 2,045-2,050, and resistance level is at 2,080:
The technology Nasdaq 100 futures contract (CFD) retraces some of its yesterday's move down, as it currently trades along the level of 4,400. The nearest important level of support is at 4,365-4,370, marked by local low, and resistance level is at around 4,400, as the 15-minute chart shows:
Concluding, the broad stock market sold off quite sharply yesterday, as investors reacted to news concerning Greece debt crisis. We maintain our already profitable speculative short position (2,098.27, S&P 500 index), as we expect a 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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