Stock Trading Alert: Short-Term Uncertainty Following Last Week's Selloff - Will Downtrend Continue?

By: Paul Rejczak | Mon, Aug 4, 2014
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Stock Trading Alert originally published on August 4, 2014, 6:28 AM:


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

Our intraday outlook is bearish, and our short-term outlook is bearish, following a breakout below recent consolidation:

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 0.3-0.4% on Friday, extending their recent selloff, as investors reacted to some key economic data announcements - monthly jobs report, the ISM index, among others. Investors begin to expect rising interest rates, which is putting downward pressure on stock prices. The S&P 500 index got closer to the level of 1,900, as it reached the daily low at 1,916.37, which is the lowest since early June. The market remains in a short-term downtrend, following a breakout below upward trend line. The nearest important support level is at around 1,900-1,920. On the other hand, the level of resistance is at 1,940-1,950, marked by previous local lows. There have been no confirmed positive signals so far, as we can see on the daily chart:

S&P500 Daily Chart
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Expectations before the opening of today's session are positive, with index futures currently up 0.3%. The main European stock market indexes have been mixed between -0.2% and +0.3% so far. The S&P 500 futures contract (CFD) is in an intraday consolidation, following last week's decline. The nearest important level of support is at 1,910-1,915, and the nearest resistance level is at around 1,930, marked by Friday's local highs, as the 15-minute chart shows:

S&P500 15-Minute Chart
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The technology Nasdaq 100 futures contract (CFD) is in a similar consolidation, following recent move down. The resistance level is at around 3,900, and the level of support remains at around 3,850. For now, it looks like a flat correction within a short-term downtrend:

NASDAQ 100 Futures 15-Minute Chart
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Concluding, the broad stock market is in a short-term downtrend, following last week's breakout below two-month long upward trend line. In our opinion, speculative short positions with a stop-loss at 1,970 and a potential profit target at 1,850 (S&P 500 index) seem justified at this moment.

Thank you.



Paul Rejczak

Author: Paul Rejczak

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts

Paul Rejczak

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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