Stocks Continue To Fluctuate Along Record Levels: Which Direction Is Next?

December 1, 2014

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,085 and profit target at 1,950, S&P 500 index).

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

Intraday (next 24 hours) outlook: bearish

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

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

Long-term outlook (next year): bullish

The U.S. stock market indexes were mixed between -0.3% and +0.5% on Friday, extending their short-term consolidation, as investors continued to hesitate following recent move up. However, the S&P 500 index has managed to reach yet another new all-time high at the level of 2,075.76, before closing down 0.3%. The nearest important resistance level is at around 2,085-2,100. On the other hand, level of support is at 2,060-2,065, marked by recent local lows, and the net support level is at 2,053.8-2,056.8, marked by November 21st daily gap up. There have been no confirmed negative signals so far, however, we can see overbought conditions accompanied by negative technical divergences:

Expectations before the opening of today’s trading session are negative, with index futures currently down 0.3-0.5%. The main European stock market indexes have lost 0.2-0.8% so far. Investors will now wait for the ISM Index announcement at 10:00 a.m. The S&P 500 futures contract (CFD) is in an intraday downtrend, as it trades closer to the support level of 2,050. The nearest important level of resistance is at around 2,060-2,065, marked by recent local lows, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract (CFD) is relatively stronger, as it extends its short-term consolidation following recent rally. The nearest important level of resistance is at around 4,350, marked by long-term high, as the 15-minute chart shows:

Concluding, the broad stock market remains relatively close to its all-time high. There have been no confirmed negative signals so far. However, we still expect a downward correction or an uptrend reversal. Therefore, we continue to maintain our speculative short position. Stop-loss is at 2,085 and potential profit target is at 1,950 (S&P 500 index). 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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