Stocks Retraced Last Week’s Move Up As Investors’ Sentiment Worsened

October 8, 2014

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 1,985 and profit target at 1,900, 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 lost between 1.4% and 1.6% on Tuesday, retracing last week’s rebound, as investors sold stocks ahead of economic data announcements, quarterly corporate earnings releases, among others. Our yesterday’s intraday outlook has proved accurate. The S&P 500 index bounced off the resistance level at around 1,980-1,985, as it broke below the level of 1.950. The nearest important level of support is at 1,925-1,930, marked by last Thursday’s daily low. There have been no confirmed positive signals so far, as we can see on the daily chart:

Expectations before the opening of today’s session are virtually flat, with index futures currently down 0.1%. The main European stock market indexes have lost 0.6-0.9% so far. Investors will now wait for the FOMC Minutes release at 2:00 p.m., looking for hints regarding potential monetary policy changes. The S&P 500 futures contract (CFD) trades close to it local low, as it fluctuates along the level of 1,930. The nearest important resistance level is at around 1,930-1,935, and the level of support is at 1,915-1,920, marked by recent local low, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path as it trades closer to last week’s local low, testing support level of 4,930-4,950. On the other hand, the level of resistance is at 3,980-4,000, among others:

Concluding, the broad stock market retraced its recent move up and it may continue short-term downtrend. So, we remain bearish, expecting more downside. We continue to maintain our already profitable speculative short position with entry point at 2,000.5 – S&P 500 index. The stop-loss is at the level of 1,985. Potential profit target remains at 1,900 (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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