Positive Expectations Following Greece Debt Deal - New All-time Highs Ahead?

July 16, 2015

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, and profit target at 1,980, S&P 500 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 main U.S. stock market indexes were virtually flat on Wednesday, as investors took some short-term profits off the table, following recent move up. The S&P 500 index remained above the level of 2,100. The nearest important resistance level is at around 2,120, and the next level of resistance is at 2,130-2,135, marked by May 20 all-time high of 2,134.72. On the other hand, support level is at 2,085-2,100, among others, as the daily chart shows:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.3-0.4%. The European stock market indexes have gained 0.4-1.5% so far. Investors will now wait for some economic data announcements: Initial Claims at 7:30 a.m., Philadelphia Fed, NAHB Housing Market Index at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it continues its short-term move up. The nearest important resistance level is at around 2,120-2,130, and support level remains at 2,100, among others:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it continues its long-term uptrend. The nearest important level of support is at around 4,530, as we can see on the 15-minute chart:

Concluding, the broad stock market fluctuated yesterday, as investors took some short-term profits off the table. We continue to maintain our speculative short position (2,098.27, S&P 500 index), as we expect a medium-term 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.

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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