New Downtrend Or Some More Short-Term Sideways Action?

September 21, 2015

Briefly: In our opinion, no speculative positions are justified

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

Intraday outlook (next 24 hours): neutral

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

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

Long-term outlook (next year): bullish

The U.S. stock market indexes lost 1.4-1.7% on Friday, as investors reacted to Thursday's FOMC rate decision announcement, among others. The S&P 500 index bounced off resistance level at around 1,980-2,000. On the other hand, support level is at 1,950, and the next support level is at 1,900-1,920. There have been no confirmed positive signals so far. It still looks like a correction following late August sell-off:

Expectations before the opening of today's trading session are virtually flat, with index futures currently up 0.1%. Investors will now wait for the Existing Home Sales number release at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday consolidation, following its Friday's move down. The nearest important level of support is at around 1,930, marked by previous local lows, and resistance level is at around 1,980, among others, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades within an intraday consolidation. The nearest important level of support is at 4,300, and resistance level is at 4,350, among others, as we can see on the 15-minute chart:

Concluding, the broad stock market sold off on Friday, following the S&P 500's failed attempt at breaking above resistance level of 2,000. There have been no confirmed positive signals so far. It looks like an upward correction within a medium-term downtrend. We prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.


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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