Positive Expectations Following Last Week's Move Down - Will Downtrend Reverse?

March 16, 2015

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,090 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 U.S. stock market indexes lost 0.5-0.8% on Friday, extending their short-term fluctuations following recent move down. The S&P 500 index continues to trade along the level of 2,050. There have been no confirmed short-term positive signals so far. The nearest important level of resistance is at around 2,060-2,065, marked by local highs. On the other hand, support level is at 2,040, as we can see on the daily chart:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.4%. The main European stock market indexes have gained 0.5-1.1% so far. Investors will now wait for some economic data announcements: Empire Manufacturing number at 8:30 a.m., Industrial Production, Capacity Utilization at 9:15 a.m., NAHB Housing Market Index at 10:00 a.m. The S&P 500 futures contract (CFD) is in an intraday uptrend, as it retraces last week's move down. The nearest important level of resistance is at around 2,050, and support level is at 2,035-2,040:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it retraces its recent move down. The nearest important level of support is at 4,280-4,300 and resistance level is at 4,320, as the 15-minute chart shows:

Concluding, the broad stock market extended its short-term fluctuations following recent move down. For now, it looks like a flat correction within a downtrend. Therefore, we continue to maintain our speculative short position (opened on February 18 at 2,099.16, S&P 500 index), as we expect some more downside. Stop-loss level is at 2,090 (S&P 500 index) 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.

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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