Stock Trading Alert: Stock Extended Their Sell-Off - Will Downtrend Continue?
Stock Trading Alert originally published on October 13, 2014, 6:30 AM:
Briefly: In our opinion, no speculative positions are justified at this moment. We will close our profitable short position with entry price of 2,000.5 (on August 27th, S&P 500 index) at the open of today's trading session (cash market), as the S&P 500 is reaching our potential profit target of 1,900.
Our intraday outlook is neutral, and our short-term outlook is neutral:
Intraday (next 24 hours) outlook: neutral
Short-term (next 1-2 weeks) outlook: neutral
Medium-term (next 1-3 months) outlook: neutral
Long-term outlook (next year): bullish
The U.S. stock market indexes lost between 0.7% and 2.5% on Friday, extending their recent downtrend, as investors continued to sell stocks ahead of corporate quarterly earnings releases, among others. Our Friday's bearish intraday outlook has proved accurate. The S&P 500 index got close to the level of 1,900, as it reached level of support marked by the early August local low and April-May consolidation. On the other hand, the nearest important resistance level is at around 1,920-1,925, marked by recent local lows, as we can see on the daily chart:
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 gained 0.1-0.5% so far. The S&P 500 futures contract (CFD) extended its downtrend earlier in the morning. However, it later managed to bounce off the support level at around 1,880. The nearest important level of resistance is at 1,900, marked by previous support level, as the 15-minute chart shows:
The technology Nasdaq 100 was relatively weaker as it accelerated a sell-off, getting closer to the level of 3,800. The nearest important support level is at around 3,800-3,820. On the other hand, the level of resistance is at 3,880-3,900, among others:
Concluding, the broad stock market accelerated its downtrend on Friday, breaking below last week's consolidation. The S&P 500 index has almost reached our profit target level at 1,900. So, we decided to close our speculative short position at the open of today's trading session (cash market). There are some short-term oversold conditions which may lead to an upward correction or downtrend reversal. Therefore, we prefer to be out of the market at this moment. We will let you know when we think it is safe to get back in the market.