Stock Trading Alert: Uncertainty Following Friday's Decline - Will Downtrend Continue?
Stock Trading Alert originally published on March 9, 2015, 7:50 AM:
Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,150 and profit target at 1,980, S&P 500 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.