Investors' Sentiment Improved Ahead Of Economic Data Releases, Holiday Weekend

July 2, 2015

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, and profit target at 1,980, S&P500 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): neutral

Long-term outlook (next year): bullish

The main U.S. stock market indexes gained 0.7-0.8% on Wednesday, retracing some more of their recent move down, as investors reacted to economic data announcements. The S&P 500 index remains below the level of 2,100. The nearest important level of resistance is at around 2,070-2,080, marked by previous local lows. On the other hand, support level is at 2,040-2,050, as the daily chart shows:

Expectations before the opening of today's trading session are virtually flat, with index futures currently up 0.1%. The European stock market indexes have lost 0.1% so far. Investors will now wait for series of economic data announcements: Initial Claims, Nonfarm Payrolls, Unemployment Rate at 8:30 a.m., Factory Orders at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it retraces yesterday's late session move down. The nearest important level of resistance is at around 2,075-2,080, and support level is at 2,040-2,050, among others:

The technology Nasdaq 100 futures contract (CFD) continues to trade along the level of 4,400. The nearest important level of resistance is at 4,440-4,450, marked by Monday's gap down opening. On the other hand, support level remains at 4,360-4,370, as we can see on the 15-minute chart:

Concluding, the broad stock market retraced some of its recent move down. For now, it looks like a correction within a short-term downtrend. Therefore, we continue to maintain our already profitable speculative short position (2,098.27, S&P 500 index), as we expect a medium-term downward correction or an uptrend reversal. Stop-loss is at 2,140, and potential profit target is at 1,980. 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.

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.

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