Uncertainty Following Friday's Decline: Will Downtrend Continue?

March 9, 2015

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,150 and profit target at 1,980, S&P500 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 main U.S. stock market indexes lost between 1.2% and 1.5% on Friday, as investors reacted to better-than-expected monthly jobs report release, which may lead to an early interest rate hike. Our Friday's negative intraday outlook has proved accurate. The S&P 500 index broke below its recent consolidation, as it fell below its support level of 2,085-2,100. The nearest important level of support is at around 2,060-2,065, marked by previous resistance level. On the other hand, resistance level is at around 2,085-2,100, as we can see on the daily chart:

Expectations before the opening of today's trading session are slightly negative, with index futures currently don 0.1%. The European stock market indexes have lost 0.3-0.7% so far. The S&P 500 futures contract (CFD) trades within a relatively narrow intraday consolidation. The nearest important level of resistance is at around 2,070, and support level is at 2,065, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades along the level of 4,400. The nearest important level of support is at around 4,085-4,090, marked by Friday's low. On the other hand, resistance level is at 4,410-4,415, marked by some previous local highs:

Concluding, the broad stock market sold off on Friday, as investors reacted to economic data releases. We continue to maintain our speculative short position (opened on February 18 at 2,099.16, 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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