Stocks Likely To Open Higher As Geopolitical Tensions Lighten

August 18, 2014

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 1,970 and a profit target at 1,850, S&P 500 index)

Our intraday outlook is bearish, and our short-term outlook remains 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, following volatile trading session, as investors reacted to some geopolitical news concerning Russia-Ukraine conflict, among others. The S&P 500 index retraced more than half of its late July – early August decline, however, closing slightly below Fibonacci’s 61.8% retracement of 1,958.3 (with the daily high at 1,964.04). The resistance level is at around 1,970-1,980, marked by previous local highs, and the next resistance is at 1,990-2,000, marked by July 24 all-time high of 1,991.39. It still looks like a correction within a short-term uptrend, however, a bullish scenario cannot be excluded here:

Expectations before the opening of today’s session are positive, with index futures currently up 0.5%. The main European stock market indexes have gained 0.6-1.4% so far. The S&P 500 futures contract (CFD) is in a relatively narrow intraday trading range, fluctuating along Friday’s highs. The nearest important resistance level is at around 1,960-1,965, marked by some of the previous local extremes. On the other hand, the level of support remains at 1,940, among others, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract (CFD) reaches new long-term highs, as it trades close to the level of 4,000. The nearest important support level is at around 3,950-3,970, as the 15-minute chart shows:

Concluding, the broad stock market continues its recent move up, as it retraces more than half of the late July – early August sell-off. Is this a new uptrend or just a strong upward correction? We remain cautiously pessimistic, maintaining our speculative short position, with stop-loss at 1,970 (S&P 500 index). So, the price currently tracks dangerously close to our stop-loss figure. 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 to 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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