Investors' Sentiment Worsens…New Downtrend Or More Fluctuations?

December 10, 2015

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2140 and profit target at 1990, 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): bearish

Long-term outlook (next year): bullish

The U.S. stock market indexes gained 0.3-0.4% on Wednesday, as investors reacted to some economic data releases. Our yesterday's bearish intraday outlook has proved accurate. The S&P500 index extends its consolidation following October rally, as it continues to trade below resistance level of 2100. The next important level of resistance is at around 2130, marked by late May all-time high. On the other hand, support level is at 2020-2050:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.3-0.4%. The main European stock market indexes have been mixed so far. Investors will now wait for the Initial Claims number release at 8:30 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it retraces some of yesterday's move down. The nearest important level of resistance is at 2,060-2,070, and support level is at around 2,030-2,040, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it bounces off support level of 4600. On the other hand, level of resistance is at 4650, among others, as we can see on the 15-minute chart:

Concluding, the broad stock market extended its short-term move down yesterday, as investors reacted to economic data releases. We continue to maintain our speculative short position (2088.35, S&P500 index). Stop-loss is at 2140 and potential profit target is at 1990 (S&P500 index). You can trade S&P500 index using futures contracts (S&P500 futures contract - SP, E-mini S&P500 futures contract - ES) or an ETF like the SPDR S&P500 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.


Courtesy of

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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