Briefly: In our opinion, speculative long positions are favored (with stop-loss at 1,840, and profit target at 1,990, S&P 500 index)

Our intraday outlook is bullish, and our short-term outlook is bullish. However, our medium-term outlook remains bearish, as the S&P 500 index extends its lower highs, lower lows sequence:

Intraday outlook (next 24 hours): bullish
Short-term outlook (next 1-2 weeks): bullish
Medium-term outlook (next 1-3 months): bearish
Long-term outlook (next year): bullish

The main U.S. stock market indexes gained 1.4-2.2% on Thursday, retracing some of their recent move down, as investors hunted price bargains. The S&P 500 index bounced off support level of 1,870-1,900, marked by last year's August - September lows. On the other hand, the nearest important level of resistance remains at around 1,930-1,950, marked by previous short-term local highs. There have been no confirmed positive signals so far. However, we can see oversold conditions accompanied by an increased volatility, which may lead to an upward correction or downtrend reversal at some point. Will the market break below last year's lows and continue this decline? Or will it remain above this medium-term support level? It is still a year-long consolidation following 2009-2015 bull market:

Expectations before the opening of today's trading session are very negative, with index futures currently down 1.5-1.7%. The European stock market indexes have lost 1.3-1.4% so far. Investors will now wait for series of economic data announcements: Retail Sales, Producer Price Index, Empire Manufacturing number at 8:30 a.m., Industrial Production, Capacity Utilization at 9:15 a.m., Michigan Sentiment, Business Inventories at 10:00 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it retraces yesterday's rebound. The nearest important level of support is at around 1,870, marked by yesterday's daily low. On the other hand, resistance level is at 1,900, and the next important level of resistance is at 1,920-1,925, marked by yesterday's daily high. There have been no confirmed positive signals so far. The market continues to fluctuate along the level of 1,900, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract follows a similar path, as it retraces most of its yesterday's bounce. The nearest important level of resistance is at 4,200. On the other hand, support level is at 4,120-4,150, marked by yesterday's daily low. We can see some increased short-term volatility, but will it lead to an upward correction or downtrend reversal?

Concluding, the broad stock market bounced off yesterday, but expectations before the opening of today's trading session are very negative. The S&P 500 index continues to trade above last year's August - September lows and potential support level of 1,870. We can see short-term technical oversold conditions accompanied by an increased volatility which may lead to an upward correction or downtrend reversal at some point. There have been no confirmed positive signals so far. However, we continue to maintain our speculative long position (1,891.68, S&P 500 index). We expect an upward correction or short-term downtrend reversal. Stop-loss level is at 1,840, and potential profit target level is at 1,990, marked by resistance level of 1,980-2,000. 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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