Briefly: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 -0.6% and +0.4% on Monday, following last week's move up, as investors took some short-term profits off the table. The S&P 500 index remains close to the level of 2,000. For now, it looks like a flat correction within an uptrend. There have been no confirmed negative signals so far. However, we can see overbought conditions. The nearest important level of resistance is at around 2,010, marked by local high, and the next important level of resistance is at 2,040, marked by the early January daily gap down of 2,038.20-2,043.62. On the other hand, support level is at 1,960-1,980, marked by previous level of resistance. The next important level of support is at 1,950, marked by previous local high, as we can see on the daily chart:

Expectations before the opening of today's trading session are negative, with index futures currently down 0.6-0.8%. The main European stock market indexes have lost 0.9-1.5% so far. The S&P 500 futures contract trades within an intraday downtrend, as it retraces some more of its last week's move up. The nearest important level of support is at around 1,980-1,985, marked by recent local lows. On the other hand, resistance level is at 2,000-2,010, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday downtrend following recent rally. The nearest important level of resistance remains at around 4,300-4,350, marked by short-term consolidation. On the other hand, potential level of support is at 4,150-4,200, marked by some previous local lows:

Concluding, the broad stock market traded within a short-term consolidation yesterday, as the S&P 500 index fluctuated along the level of 2,000. There have been no confirmed short-term  negative signals so far. However, we continue to maintain our speculative short position (opened at around 1,995 - yesterday's average opening price of S&P 500 index). We expect a downward correction or uptrend reversal at some point. Stop-loss level is 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
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