Indexes Remain Within Medium-Term Consolidation – Which Direction Is Next?

January 22, 2015

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

Our intraday outlook remains neutral, and our short-term outlook is neutral:

Intraday (next 24 hours) outlook: neutral

Short-term (next 1-2 weeks) outlook: neutral

Medium-term (next 1-3 months) outlook: neutral

Long-term outlook (next year): bullish

The U.S. stock market indexes gained 0.2-0.5% on Wednesday, extending their short-term move up, as investors reacted to quarterly corporate earnings releases, economic data announcements, among others. The S&P 500 index remains above the level of 2,000, which is positive. The nearest important resistance level is at around 2,030-2,050, marked by previous consolidation. On the other hand, level of support is at 1,990-2,000, marked by this month’s local lows, as we can see on the daily chart:

Expectations before the opening of today’s trading session are positive, with index futures currently up 0.2-0.3%. The main European stock market indexes have been mixed between -0.3% and +0.3% so far, ahead of ECB policy decision announcement. Investors will also wait for some economic data releases: Initial Claims at 8:30 a.m., FHFA Housing Price Index at 9:00 a.m. The S&P 500 futures contract (CFD) is in an intraday uptrend, as it trades along the level of 2,030. The nearest important level of support is at 2,015-2,020, marked by recent local lows:

The technology Nasdaq 100 futures contract (CFD) is slightly below the level of resistance at 4,200. On the other hand, support level remains at around 4,150-4,170. There have been no confirmed short-term negative signals so far, as technology stocks remain in a rebound-mode:

Concluding, the broad stock market slightly extended its short-term move up on Wednesday, as the S&P 500 index got closer to the level of resistance at 2,030-2,050. For now, it looks like a volatile medium-term consolidation following last year’s October-November rally. 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.

Thank you.

Paul Rejczak

Stock Trading Strategist

Stock Trading Alerts

* * * * *


All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Paul Rejczak is a stock market strategist, who has been known for quality of his technical and fundamental analysis since the late nineties. He is interested in forecasting market behavior based on both traditional and innovative methods of technical analysis. Paul has made his name by developing mechanical trading systems. Paul is the author of Sunshine Profits’ premium service for stock traders: Stock Trading Alerts.

Gold falls on firm dollar, China rate cut lends support