Briefly: In our opinion, no speculative positions are justified.

Our intraday outlook is now neutral, and our short-term outlook is neutral. Our medium-term outlook remains neutral, following S&P 500 index breakout above last year's all-time high:

Intraday outlook (next 24 hours): neutral
Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): neutral

The main U.S. stock market indexes were mixed between -0.2% and +0.1% on Tuesday, as investors continued to hesitate following recent rally. Stocks have rebounded strongly after mid-month quick two-session sell-off. The S&P 500 index remains close to its last week's Thursday's new all-time high of 2,418.71. It has broken above the May 16 high of 2,405.77 on Thursday, retracing the whole move down. The Dow Jones Industrial Average remains above the level of 21,000. However, it continues to trade below the March 1 all-time high. The technology Nasdaq Composite is trading above the level of 6,200, along its Thursday's new all-time high. The nearest important resistance level of the S&P 500 index is at around 2,415-2,420, marked by new record high. On the other hand, support level is currently at around 2,400-2,410, marked by previous level of resistance, along with last Thursday's daily gap up of 2,405.58-2,408.01. The next level of support remains at 2,390-2,395, marked by some short-term local lows. The support level is also at 2,385, marked by local low. Will the uptrend continue towards 2,500 mark? There have been no confirmed negative signals so far. However, we can see some overbought conditions and negative technical divergences. The S&P 500 index continues to trade slightly below its November-April upward trend line, as we can see on the daily chart:

Expectations before the opening of today's trading session are positive, with index futures currently up between +0.1% and +0.2% vs. their yesterday's closing prices. The European stock market indexes have gained 0.2-0.5% so far. Investors will now wait for some economic data announcements: Chicago PMI number at 9:45 a.m., Pending Home Sales at 10:00 a.m., Fed's monthly report 'Beige Book' release at 2:00 pm. The market expects that the Chicago PMI was at 57.0 in May. The S&P 500 futures contract trades within an intraday consolidation, as it extends its recent fluctuations. It is currently trading just 0.2% below new record high above the level of 2,417. The nearest important level of resistance is at around 2,415-2,420, marked by that new all-time high. On the other hand, support level is at 2,400-2,405, marked by previous level of resistance. The next important level of support is at 2,390-2,395, marked by recent fluctuations. The market trades within a relatively flat correction following recent rally reaching new all-time high. There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions, along with negative technical divergences:

The technology Nasdaq 100 futures contract is currently trading close to new record high above the level of 5,800. The nearest important level of resistance is at around 5,805. On the other hand, support level is at 5,770-5,780, marked by short-term consolidation. The next level of support is at around 5,740-5,760, marked by some previous fluctuations, as the 15-minute chart shows:

Concluding, the S&P 500 index broke above its mid-May high on Thursday last week, as the broad stock market gauge extended week-long rally off previous week's sell-off lows along the level of 2,350. It remains within over eight-year-long bull market. The index broke above three-month-long medium-term consolidation along the level of 2,400. But will the uptrend accelerate? Or is this some topping pattern before downward reversal? We still can see some negative medium-term technical divergences. However, there have been no confirmed negative signals so far.

Our speculative short position (opened on February 15 at 2,335.58 - opening price of the S&P 500 index) has been closed on Thursday, at the stop-loss level of 2,410 - S&P 500 index, as the S&P 500 futures contract broke above the level of 2,407. We lost 74.42 index points on that trade, betting against over year-long medium-term uptrend off last year's February local low. 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. Currently, we prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.

To summarize: no speculative positions are justified from the risk/reward perspective at this moment.

Thank you.

Paul Rejczak
Stock Trading Strategist
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