No Clear Direction As Investors React To Quarterly Earnings Releases

April 23, 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 0.5-06% on Wednesday, extending their short-term consolidation, as investors reacted to further quarterly corporate earnings releases. The S&P 500 index remains relatively close to its February 25 all-time high of 2,119.59. The nearest important level of resistance is at 2,100-2,120. On the other hand, support level is at 2,070-2,080, marked by previous local lows, as we can see on the daily chart:

Expectations before the opening of today's trading session are negative, with index future currently down 0.3-0.4%. The European stock market indexes have been mixed so far. Investors will now wait for some economic data announcements: Initial Claims at 8:30 a.m., New Home Sales at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday consolidation, following yesterday's fluctuations. The nearest important level of resistance is at 2,100-2,105, and support level is at 2,070-2,080:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it fluctuates following yesterday's volatile trade. The nearest important level of resistance is at 4,450-4,460. On the other hand, support level is at 4,400-4,420, as the 15-minute chart shows:

Concluding, the broad stock market remains relatively close to its all-time high. There have been no confirmed negative signals so far. However, we continue to maintain our speculative short position (2,098.27, S&P500 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&P500 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.


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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