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 now 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 main U.S. stock market indexes were mixed between -0.5% and +0.3% on Tuesday, as investors took some short-term profits off the table following last week's rally. The S&P 500 index remains close to the resistance level of 2,100. The next important resistance level is at 2,110-2,115, marked by April's local high of 2,111.05, among others. On the other hand, support level is at 2,070-2,085, marked by previous level of resistance. The next important level of support 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 negative, with index futures currently down 0.2-0.4%. The main European stock market indexes have lost 0.7-0.8% so far. Investors will now wait for some economic data announcements: ADP Employment Change number at 8:15 a.m., Construction Spending, ISM Index at 10:00 a.m., Fed's Beige Book release at 2:00 p.m. The S&P 500 futures contract trades within an intraday downtrend, following its yesterday's bounce. The nearest important level of resistance remains at 2,100-2,105. On the other hand, support level is at 2,085, marked by yesterday's daily low, among others. There have been no confirmed negative signals so far. However, we may see some short-term topping pattern:

The technology Nasdaq 100 futures contract follows a similar path, as it retraces some of its yesterday's bounce. The nearest important level of resistance is at around 4,520-4,540. On the other hand, support level is at 4,500 mark, and the next important level of support is at 4,480-4,490, marked by previous local lows, as we can see on the 15-minute chart:

Concluding, the broad stock market extends its short-term consolidation, as the S&P 500 index trades close to 2,100 mark. But will the index continue its seven-year long bull market and break above last May's all-time high? For now, it looks like another upward move within medium-term consolidation. We can see technical overbought conditions that may lead to uptrend's reversal or downward correction. Therefore, we decided to open a speculative short position at the opening of today's cash market trading session (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
Stock Trading Alerts