Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, and profit target at 1,980, S&P 500 index)
Our intraday outlook is bearish, and our short-term outlook is bearish:
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): bullish
The U.S. stock market indexes lost 0.5-0.6% on Monday, as investors reacted to news concerning Greece debt deal talks, among others. Our yesterday's bearish intraday outlook has proved accurate. The S&P 500 index remains below the level of 2,100, extending its medium-term consolidation. There have been no confirmed negative signals so far, however, we still can see negative technical divergences. The nearest important level of resistance is at around 2,100, and support level is at 2,070-2,080, marked by recent local lows, as the daily chart shows:
Expectations before the opening of today's trading session are negative, with index futures currently down 0.5-0.6%. The main European stock market indexes have lost 0.6-1.2% so far. Investors will now wait for some economic data announcements: Housing Starts, Building Permits at 8:30 a.m. The S&P 500 futures contract (CFD) trades within an intraday downtrend, as it retraces yesterday's rebound. The nearest important resistance level remains at 2,080-2,085, marked by local highs. On the other hand, support level is at 2,070:
The technology Nasdaq 100 futures contract (CFD) trades along the level of 4,400, following recent move down. The nearest important level of resistance is at 4,440-4,450, marked by local highs, and support level is at 4,390-4,400, as we can see on the 15-minute chart:
Concluding, the broad stock market retraced its last week's rebound, as the S&P 500 index came back below the level of 2,100. We continue to maintain our speculative short position (2,098.27, S&P 500 index), as we expect a downward correction or an uptrend reversal. Stop-loss is at 2,140, and potential profit target is at 1,980. 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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