Negative Expectations As Investors Continue To Worry…Will Downtrend Extend Even Further?

October 16, 2014

Briefly: In our opinion, no speculative positions are justified at this moment.

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

Intraday (next 24 hours) outlook: neutral

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

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

Long-term outlook (next year): bullish

The U.S. stock market indexes lost between 0.6% and 1.1% on Wednesday, extending their recent move down, as investors kept selling stocks ahead of quarterly corporate earnings releases, economic data announcements. The S&P 500 index bounced off sharply following a quick sell-off to new medium-term low at 1,820.66, which is almost 200 points below the September 19th all-time high of 2,019.26. The nearest important resistance level is at around 1,870-1,875, marked by previous support level. On the other hand, potential level of support is at 1,800-1,820. There have been no confirmed positive signals so far, however, we can see some oversold conditions:

Expectations before the opening of today’s trading session are negative, with index futures currently down 0.9-1.1%. The main European stock market indexes have lost 1.8-2.8% so far. Investors will now wait for some economic data announcements: Initial Claims at 8:30 a.m., Industrial Production at 9:15 a.m., Philadelphia Fed, NAHB Housing Market Index at 10:00 a.m. The S&P 500 futures contract (CFD) is in an intraday downtrend, as it trades closer to yesterday’s low. The nearest important level of support is at around 1,810-1,820, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it is close to yesterday’s low. Support level remains at around 3,690-3,700. On the other hand, the level of resistance is at 3,750-3,760, among others:

Concluding, the broad stock market extended its recent sell-off, as the S&P 500 index fell almost 10% below its September all-time high above the level of 2,000. There are some short-term oversold conditions which may lead to an upward correction or downtrend reversal at some point. Therefore, we prefer to be out of the market at this moment. We will let you know when we think it is safe to get back in the market.

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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