Stocks Fluctuate Along Record Highs - Which Direction Is Next?

March 2, 2015

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,150 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 0.3-0.5% on Friday, retracing some of their recent advance, as investors reacted to worse-than-expected economic data releases. The S&P 500 index remains relatively close to its February 25 all-time high of 2,119.59. The nearest important resistance level is at around 2,115-2,120. On the other hand, level of support is at 2,085-2,100, marked by previous resistance level, among others. There have been no confirmed negative signals so far. However, we can see overbought conditions accompanied by negative divergences:

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 been mixed so far. Investors will now wait for some economic data announcements: Personal Income, Personal Spending, PCE Prices-Core number at 8:30 a.m., ISM Index, Construction Spending at 10:00 a.m. The S&P 500 futures contract (CFD) remains within its short-term consolidation, as it continues to fluctuate along the level of 2,100. The nearest important level of resistance is at around 2,110-2,120, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract (CFD) is within a similar short-term consolidation, as it continues to trade along the level of 4,450. The nearest important level of support is at 4,430-4,440, marked by some previous local lows, as the 15-minute chart shows:

Concluding, the broad stock market retraced some more of its recent advance on Friday. However, there have been no confirmed negative signals. We continue to maintain our speculative short position (S&P 500 index), as we expect downward correction or an uptrend reversal. Stop-loss is at 2,150, 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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