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 virtually flat on Monday, after Friday's rally, as investors took some short-term profits off the table. The S&P 500 index continues to trade above the level of 2,000. The nearest important level of resistance is at around 2,040, marked by the early January daily gap down of 2,038.20-2,043.62. On the other hand, support level remains at 2,000 mark, and the next support level is at 1,960-1,980, marked by previous level of resistance. There have been no confirmed negative signals so far. However, we can see some technical overbought conditions. Is this a new uptrend leading to last year's all-time high or still just an upward correction following January sell-off? The S&P 500 continues its short-term uptrend so far, as we can see on the daily chart:

Expectations before the opening of today's trading session are negative, with index futures currently down 0.4-0.6%. The European stock market indexes have lost 0.7-1.0% 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., Business Inventories, NAHB Housing Market Index releases at 10:00 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it retraces some of its recent advance. The nearest important level of resistance is at around 2,010-2,015, marked by local highs. On the other hand, support level is at 1,990-2,000, among others. For now, it looks like a downward correction within a short-term uptrend. There have been no confirmed negative signals so far:

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday downtrend. It retraces some of its recent advance. The nearest important level of support is at around 4,300-4,320. On the other hand, resistance level is at 4,350-4,370, marked by local highs. For now, it looks like a correction within a short-term uptrend, as the 15-minute chart shows:

Concluding, the broad stock market slightly extended its short-term uptrend on Friday, as the S&P 500 index remained above the level of 2,000. Will it continue towards last year's medium-term highs above the level of 2,100? There have been no confirmed short-term negative signals so far. However, we continue to maintain our speculative short position (opened on March 7th at 1,995, 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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