Negative Expectations Following Short-Term Consolidation
Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,030, and a profit target at 1,900, 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 main U.S. stock market indexes were virtually flat on Wednesday, as investors hesitated following recent rally. The S&P 500 index remains close to its all-time high of 2,005.04, trading along the level of 2,000. The nearest important resistance level is at around 2,000-2,005. On the other hand, the level of support is at 1,980-1,990, marked by some of the recent local lows. There have been no confirmed negative signals so far. However, we can see negative divergences, accompanied by some technical overbought conditions:
Expectations before the opening of today’s session are negative, with index futures currently down 0.3%. The European stock market indexes have lost 0.4-0.8% so far. Investors will now wait for some economic data announcements: Initial Claims, GDP – Second Estimate at 8:30 a.m., Pending Home Sales at 10:00 a.m. The U.S. GDP figure will be closely watched as markets are expecting a confirmation of an economic rebound. The S&P 500 futures contract (CFD) is in a descending intraday channel, as it trades below the level of 2,000. The resistance level is at around 2,000, and the nearest important level of support is at 1,980-1,985, among others, as we can see on the 15-minute chart:
The technology Nasdaq 100 futures contract (CFD) is in an intraday downtrend, as it trades below the level of 4,080. The resistance level remains at 4,080-4,100, and the nearest important level of support is at around 4,050-4,060, as the 15-minute chart shows:
Concluding, the broad stock market remains close to its all-time high. There have been no confirmed uptrend reversal signals so far. However, we can see some negative technical divergences. We remain cautiously pessimistic, expecting a downward correction. Therefore, we continue to maintain our speculative short position (entry point at 2,000.5 - S&P 500 index). The stop-loss is at 2,030, and potential profit target at the level of 1,900 (S&P 500 index).
Stock Trading Strategist
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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.