Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140 and profit target at 1,990, 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): bearish
Long-term outlook (next year): bullish

The U.S. stock market indexes lost 0.5% on Friday, retracing some of their recent move up, as investors reacted to economic data announcements, quarterly corporate earnings releases. Our Friday's bearish intraday outlook has proved accurate. The S&P 500 index continues to trade within its February - August consolidation. The nearest important resistance level is at around 2,100-2,130, and support level is at 2,020-2,050, marked by previous level of resistance. There have been no confirmed negative signals so far, however, we can see some short-term overbought conditions:

Expectations before the opening of today's trading session are virtually flat, with index futures currently up 0.1%. The main European stock market indexes have been mixed so far. Investors will now wait for some economic data releases: ISM Index, Construction Spending at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it retraces its overnight move down. The nearest important level of support is at around 2,060, and resistance level is at 2,090-2,100, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it currently trades along the level of 4,650. The nearest important level of support is at 4,620, marked by local low, and resistance level is at 4,670-4,700, as we can see on the 15-minute chart:

Concluding, the broad stock market has retraced some of its recent advance on Friday, as investors took profits off the table. There have been no confirmed short-term negative signals so far. However, we can see overbought conditions. We expect a downward correction or short-term uptrend reversal. Therefore, we continue to maintain our already profitable speculative short position (2,088.35, S&P 500 index). Stop-loss is at 2,140 and potential profit target is at 1,990. 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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