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 gained between 1.0% and 1.4% on Thursday, as investors reacted to Wednesday's FOMC Rate Decision announcement. The S&P 500 index got closer to its May 20 all-time high of 2,134.72. The nearest important level of resistance is at around 2,130-2,135. On the other hand, support level is at 2,100, among others. There have been no confirmed negative signals so far. However, we still can see negative technical divergences:
Expectations before the opening of today's trading session are positive, with index futures currently up 0.1-0.2%. The main European stock market indexes have gained 0.6-1.2% so far. The S&P 500 futures contract (CFD) trades along its local highs. The nearest important level of resistance is at around 2,120-2,130, and support level remains at 2,100, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades along record level. The nearest important level of resistance is at 4,550. On the other hand, support level is at 4,500, as we can see on the 15-minute chart:
Concluding, the broad stock market retraced its recent move down yesterday, as investors' sentiment further improved following Wednesday's FOMC Rate Decision release. However, 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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