Negative Expectations Following Failed Greece Debt Crisis Talks

June 29, 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 were mixed between -0.7% and +0.3% on Friday, as investors remained uncertain ahead of news concerning Greece debt crisis. The S&P 500 index trades within a short-term downtrend. The nearest important level of resistance is at around 2,115, marked by local highs. On the other hand, support level is at 2,070-2,080, among others. There have been no confirmed negative signals so far. However, we can see negative technical divergences:

Expectations before the opening of today's trading session are negative, with index futures currently down 1.0-1.3%. The European stock market indexes have lost 1.6-3.5% so far. Investors will now wait for the Pending Home Sales number release at 10:00 a.m. The S&P 500 futures contract (CFD) is within an intraday uptrend, following gap-down opening. The nearest important level of support is at 2,050-2,060, and resistance level is at 2,080-2,090, marked by Friday's local lows, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) followed a similar path, as it traded as low as 4,400 following weekend news concerning Greece debt crisis. The nearest important support level is at 4,400, and resistance level is at 4,440-4,460, marked by gap-down opening, as we can see on the 15-minute chart:

Concluding, the broad stock market slightly extended its short-term downtrend on Friday and it is bound to continue its decline today. We maintain our speculative short position (2,098.27, S&P 500 index), as we expect a 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&P500 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.

Gold weakens on global cues and lackustre demand