Stock Market Crash Or Short-Lived Panic?

August 24, 2015

Briefly: In our opinion, no speculative positions are justified.

Our intraday outlook is now neutral as is our short-term outlook. However, our medium-term outlook is now bearish:

Intraday outlook (next 24 hours): neutral

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

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

Long-term outlook (next year): bullish

The main U.S. stock market indexes lost 3.1-4.3% on Friday, as investors reacted to global stock markets retreat, economic data releases. Our Friday's bearish intraday outlook has proved accurate. The S&P 500 index broke below the level of 2,000 which is a negative medium-term signal. It is the lowest since late October, as it currently trades below half-year long consolidation. Therefore, we change our medium-term outlook from "neutral" to "bearish". We continue to maintain our bullish long-term outlook for now. The nearest important level of resistance is at around 1,980-2,000, marked by previous support level. On the other hand, potential support level is at around 1,900-1,950. There have been no confirmed short-term positive signals so far:

Expectations before the opening of today's trading session are negative, with index futures currently down 1.9-3.5%, following Asian stock markets panic sell-off. The European stock market indexes have lost 2.7-3.0% so far. The S&P 500 futures contract (CFD) trades within an intraday downtrend, as it is closer to the level of 1,900. The nearest important level of resistance is at around 1,930-1,950, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it continues last week's sell-off this morning. The nearest important level of support is at 4,000, and resistance level is at around 4,050-4,100, among others, as we can see on the 15-minute chart:

Concluding, the broad stock market continued its dramatic sell-off on Friday, as the S&P 500 index broke below its technically crucial level of 2,000. Our late April's short position's (2,098.27, S&P 500 index) profit target has been reached at the level of 1,980. Overall, we gained almost 120 index points on that pre-planned trade. As of this morning, we prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.


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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