Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, and profit target at 2,000, S&P 500 index).

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

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 lost 0.7-0.9% on Monday, extending their Friday's decline, as investors' sentiment continued to worsen. The S&P 500 index broke below its late May - early June consolidation along the level of 2,100. The nearest important level of resistance is at around 2,100. The next resistance level remains at 2,110-2,120, marked by April's local high, among others. On the other hand, support level is at around 2,070, marked by some previous local highs, and the next support level is at 2,030-2,050. Last year's highs along the level of 2,100 continue to act as medium-term resistance level. Will the market break above these medium-term highs and continue its seven-year long bull market?

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 0.7-1.3% so far. Investors will now wait for some economic data announcements: Retail Sales at 8:30 a.m., Business Inventories at 10:00 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it extends its recent decline. The nearest important level of resistance is at around 2,080. On the other hand, support level is at 2,070, marked by local low. There have been no confirmed positive signals so far. However, we can see short-term oversold conditions:

The technology Nasdaq 100 futures contract follows a similar path, as it currently trades close to the level of 4,400, after its Friday's breakdown below support level of 4,500. The nearest important level of resistance is at around 4,430, marked by local high. On the other hand, support level is at around 4,400, as we can see on the 15-minute chart:

Concluding, the broad stock market extended its short-term downtrend yesterday, as the S&P 500 index broke slightly below the level of 2,080. We continue to maintain our speculative short position (opened on June 1 at 2,093.94 - S&P 500 index). Stop-loss level is at 2,140 and potential profit target is at 2,000 (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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