Mixed Expectations Following Last Week’s Bounce…Will Uptrend Extend?

October 27, 2014

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 1,975 and profit target at 1,875, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish:

Intraday (next 24 hours) outlook: bearish

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

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

Long-term outlook (next year): bullish

The U.S. stock market indexes gained 0.7-0.8% on Friday, extending their recent move up, as investors reacted to some quarterly corporate earnings releases. The S&P 500 index remains within its late September – early October consolidation. The nearest important level of resistance is at around 1,870-1,880, marked by some previous local highs. On the other hand, support level is at 1,930-1,950, among others, as we can see on the daily chart:

Expectations before the opening of today’s trading session are  slightly negative, with index futures currently down 0.1-0.2%. The main European stock market indexes have lost between 0.3% and 0.4% so far. Investors will now wait for the Pending Home Sales number at 10:00. The S&P 500 futures contract (CFD) fluctuates following Friday’s move up. The resistance level is at around 1,965, marked by local high, and the nearest important level of support is at 1,950, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it fluctuates along the level of 4,040. The resistance level is at around 4,050, and the level of support remains at 4,000-4,020, among others. There have been no confirmed short-term uptrend reversal signals so far, however, we can see some overbought conditions:

Concluding, the broad stock market extended its recent move up, as investors reacted to better-than-expected quarterly earnings releases. The S&P 500 index is within its late September – early October consolidation, testing resistance level. We expect short-term uptrend reversal. Therefore, we continue to maintain our speculative short position. Stop-loss level is at 1,975, and potential profit target is at 1,875 (S&P 500 index). It is important to set some exit price level in case some events cause the price to move in an unlikely direction. Having safety measures in place helps limit potential losses while letting gains grow.

Thank you.

Paul Rejczak

Stock Trading Strategist

Stock Trading Alerts


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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.

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