Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,240, and profit target at 2,060, S&P 500 index).

Our intraday outlook is now bearish, and our short-term outlook is bearish. Our medium-term outlook remains neutral, following S&P 500 index breakout above last year's all-time high:

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): neutral

The main U.S. stock market indexes gained 0.3-1.3% on Tuesday, as investors' sentiment improved following economic data releases, among others. The S&P 500 index broke above the resistance level of 2,150-2,160 recently. The next resistance level is at 2,180-2,200, marked by record high. On the other hand, support level is at 2,100-2,120, marked by previous resistance level. The next important level of support remains at around 2,080, marked by recent local lows, as we can see on the daily chart:

Expectations before the opening of today's trading session are slightly negative, with index futures currently down 0.2-0.3%. The European stock market indexes have lost 0.2-0.4% so far. Investors will now wait for some economic data announcements: Producer Price Index at 8:30 a.m., Industrial Production, Capacity Utilization at 9:15 a.m., NAHB Housing Market Index at 10:00 a.m., Crude Inventories at 10:30 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it retraces some of its yesterday's move up. The nearest important level of resistance is at around 2,180-2,185, marked by short-term local high. On the other hand, support level is at 2,160-2,170, marked by previous consolidation, among others:

The technology Nasdaq 100 futures follows a similar path, as it retraces some of its yesterday's advance. The nearest important level of resistance is at around 4,780-4,800. On the other hand, support level remains at 4,680-4,700, marked by recent local lows, as the 15-minute chart shows:

Concluding, the broad stock market got closer to its recent local high yesterday, as the S&P 500 index crossed 2,180 mark. We can see some short-term overbought conditions, accompanied by negative technical divergences. Therefore, we decided to open a speculative short position at the opening of today's cash market trading session (S&P 500 index). Stop-loss level is at 2,240 and potential profit target is at 2,060 (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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