Briefly: In our opinion, no speculative positions are justified.

Our intraday outlook is neutral, and our short-term outlook is neutral. Our medium-term outlook remains bearish, as the S&P 500 index extends its lower highs, lower lows sequence. However, we decided to change our long-term outlook to neutral recently, following recent move down below medium-term lows:

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

The U.S. stock market indexes gained between 2.2% and 2.5% on Friday, as investors reacted to quarterly earnings, economic data releases. The S&P 500 index broke above the level of 1,900, extending its rebound off medium-term support level at around 1,800. The nearest important level of support is at 1,900-1,920, marked by previous level of resistance, and the next support level remains at 1,850, among others. On the other hand, resistance level is at 1,980-2,000, marked by some previous local lows. Is this a new uptrend or just correction following January sell-off? For now, it looks like an upward correction. There have been no confirmed short-term negative signals so far:

Expectations before the opening of today's trading session are negative, with index futures currently down 0.2-0.3%. The main European stock market indexes have lost 0.2-0.7% so far. Investors will now wait for some economic data announcements: Personal Income, Personal Spending, PCE Prices number at 8:30 a.m., Construction Spending, ISM Index at 10:00 am. The S&P 500 futures contract trades within an intraday consolidation, as it retraces some of its Friday's rally. The nearest important level of resistance is at around 1,930. On the other hand, support level is at 1,900-1,910, marked by previous level of resistance. For now, it looks like a short-term flat correction within an uptrend:

The technology Nasdaq 100 futures contract trades along the level of 4,250 this morning. The nearest important level of resistance is at 4,270-4,300, and support level is at around 4,200, among others. The market is slightly above its last week's high, as technology stocks remain relatively weaker than the broad stock market, following some worse-than-expected quarterly earnings releases:

Concluding, the broad stock market broke above its short-term consolidation on Friday, as the S&P 500 index got closer to the level of 1,950. Is this just an upward correction following January sell-off or new uptrend towards above 2,000 mark? It looks like a correction, but the "V-shaped" medium-term reversal is not out of question. For now, the index continues to trade along its last year's August - September local lows for some time, as they act as a medium-term level of support. We still prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts