Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,210, and profit target at 2,050, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook is 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 U.S. stock market indexes gained between 0.4% and 1.2% on Monday, as investors reacted to better-than-expected quarterly earnings releases, among others. The S&P 500 index trades close to resistance level of 2,150. Will it continue higher and retrace its recent move down? For now, it looks like an upward correction. The next resistance level is at 2,170-2,180, marked by some previous local highs. On the other hand, level of support is at 2,130, and the next support level is at 2,115-2,120, marked by previous local lows. The market continues to trade along medium-term upward trend line, as the daily chart shows:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.1-0.3%. The European stock market indexes have gained 0.1-0.4% so far. The S&P 500 futures contract trades within an intraday uptrend, as it extends its yesterday's move up. The nearest important resistance level is at around 2,150. The next resistance level is at 2,160-2,170, marked by previous local highs. On the other hand, support level is at 2,140, among others, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract is relatively stronger, as it currently trades close to its new all-time highs. The nearest important support level is at around 4,880-4,900, marked by previous level of resistance. There have been no confirmed negative signals so far. However, we can see short-term overbought conditions:

Concluding, the broad stock market extended its short-term uptrend, as it climbed along medium-term upward trend line yesterday. However, it remains relatively weaker than the record-breaking technology sector. We continue to maintain our speculative short position (opened on July 18th at 2,162, S&P 500 index). Stop-loss level is at 2,210 and potential profit target is at 2,050 (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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