New Uptrend Or Just A Quick Upward Correction?

June 11, 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 U.S. stock market indexes gained 1.2-1.3% on Wednesday, as investors reacted to news concerning Greece debt deal, among others. The S&P500 index bounced off support level at 2,070-2,080. The nearest important level of resistance is at around 2,110-2,120, marked by local highs, and the next resistance level is at 2,130-2,135, marked by May 20 all-time high of 2,134.72. There have been no confirmed negative medium-term signals so far. However, we still can see negative technical divergences:

Expectations before the opening of today's trading session are virtually flat. The European stock market indexes have gained between 0.4% and 0.9% so far. Investors will now wait for series of economic data announcements: Initial Claims, Retail Sales at 8:30 a.m., Business Inventories at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday consolidation, following yesterday's rebound. The nearest important level of support is at around 2,100, and resistance level is at 2,115-2,120, marked by previous local highs, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) trades along the level of 4,500. The nearest important level of resistance is at around 4,500. On the other hand, support level is at 4,450-4,470, among others, as we can see on the 15-minute chart:

Concluding, the broad stock market bounced sharply on Wednesday, as investors hunted for bargains following recent move down. We continue to 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&P 500 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.


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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