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Paul Rejczak

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…

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Stock Trading Alert: Indexes Extend Their Recent Fluctuations - No Clear Direction Yet

Stock Trading Alert originally published on September 11, 2014, 6:45 AM:


 

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,030 and a 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 gained 0.3-0.8% on Wednesday, extending their recent fluctuations, as investors continued to hesitate following last week's economic data announcements, among others. The S&P 500 index remains relatively close to its all-time high of 2,011.17. The nearest important level of resistance is at around 2,000-2,010, and the support level is at 1,980-1,985, marked by recent local lows. There have been no confirmed negative signals so far. However, we still can see negative technical divergences, accompanied by overbought conditions:

S&P500 Daily Chart
Larger Image

Expectations before the opening of today's session are negative, with index futures currently down 0.2-0.3%. The main European stock market indexes have lost 0.2-0.4% so far. Investors will now wait for the Initial Claims data release at 8:30 a.m. The S&P 500 futures contract (CFD) continues to fluctuate along the level of 2,000. The resistance level is at around 2,000-2,010, and the nearest important level of support is at 1,980-1,985, marked by local lows, as we can see on the 15-minute chart:

S&P500 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract (CFD) remains in a short-term consolidation, as it moves along the level of 4,000. The nearest important level of resistance is at around 4,100-4,115, and the support level is at 4,050-4,060, marked by local lows, as the 15-minute chart shows:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market retraced some of its month-long advance as the S&P 500 index broke below the level of 2,000. We remain bearish, expecting a downward correction or uptrend reversal. Therefore, 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 2,030 and potential profit target is 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.

 

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