Positive Expectations Following Yesterday's Move Down, Will Stocks Uptrend Continue?

December 3, 2015

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2140 and profit target at 1990, 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): bearish

Long-term outlook (next year): bullish

The US stock market indexes lost 0.6-1.1% on Wednesday, retracing their Tuesday's advance, as investors reacted to economic data releases, among others. The S&P500 index bounced off resistance level of 2100. The next important level of resistance is at around 2130, marked by late May all-time high. On the other hand, support level is at 2,070, marked by previous local low. For now, it looks like a consolidation following October rally:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.6-0.7%. The main European stock market indexes have gained 0.3-1.3% so far. Investors will now wait for some economic data announcements: Initial Claims at 8:30 a.m., Factory Orders, ISM Services number at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it retraces yesterday's decline. The nearest important level of resistance is at around 2,100-2,105. On the other hand, support level is at around 2,075, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it retraces yesterday's move down. The nearest important level of resistance is at 4,730-4,740, marked by record highs. On the other hand, support level remains at 4,680-4,700, as the 15-minute chart shows:

Concluding, the broad stock market extended its short-term consolidation, as it retraced Tuesday's move up. Despite recent rally, there have been no confirmed positive signals so far. The S&P 500 index continues to trade below its last month's high. We continue to maintain our speculative short position (2,088.35, S&P 500 index). Stop-loss is at 2,140 and potential profit target is at 1,990 (S&P 500 index). 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 SunshineProfits.com

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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