Stock Extended Their Sell-Off…Will Downtrend Continue?

October 13, 2014

Briefly: In our opinion, no speculative positions are justified at this moment. We will close our profitable short position with entry price of 2,000.5 (on August 27th, S&P 500 index) at the open of today’s trading session (cash market), as the S&P 500 is reaching our potential profit target of 1,900.

Our intraday outlook is neutral, and our short-term outlook is neutral:

Intraday (next 24 hours) outlook: neutral

Short-term (next 1-2 weeks) outlook: neutral

Medium-term (next 1-3 months) outlook: neutral

Long-term outlook (next year): bullish

The U.S. stock market indexes lost between 0.7% and 2.5% on Friday, extending their recent downtrend, as investors continued to sell stocks ahead of corporate quarterly earnings releases, among others. Our Friday’s bearish intraday outlook has proved accurate. The S&P 500 index got close to the level of 1,900, as it reached level of support marked by the early August local low and April-May consolidation. On the other hand, the nearest important resistance level is at around 1,920-1,925, marked by recent local lows, as we can see on the daily chart:

Expectations before the opening of today’s trading session are slightly positive, with index futures currently up 0.1-0.2%. The main European stock market indexes have gained 0.1-0.5% so far. The S&P 500 futures contract (CFD) extended its downtrend earlier in the morning. However, it later managed to bounce off the support level at around 1,880. The nearest important level of resistance is at 1,900, marked by previous support level, as the 15-minute chart shows:

The technology Nasdaq 100 was relatively weaker as it accelerated a sell-off, getting closer to the level of 3,800. The nearest important support level is at around 3,800-3,820. On the other hand, the level of resistance is at 3,880-3,900, among others:

Concluding, the broad stock market accelerated its downtrend on Friday, breaking below last week’s consolidation. The S&P 500 index has almost reached our profit target level at 1,900. So, we decided to close our speculative short position at the open of today’s trading session (cash market). There are some short-term oversold conditions which may lead to an upward correction or downtrend reversal. Therefore, we prefer to be out of the market at this moment. We will let you know when we think it is safe to get back in the market.

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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