Stock Trading Alert originally published on October 20, 2014, 6:42 AM:
Briefly: In our opinion, no speculative positions are justified at this moment.
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 gained between 1.3% and 1.6% on Friday, retracing some of their last week's losses, as investors hunted bargains following relatively sharp downward correction. The S&P 500 index bounced off the support level of 1,800-1,820, marked by previous medium-term lows. On the other hand, the nearest important level of resistance is at 1,900-1,910, marked by previous support level, among others. For now, it looks like an upward correction within a short-term downtrend, as there have been no confirmed downtrend reversal signals so far:
Expectations before the opening of today's trading session are slightly positive, with index futures currently up 0.2-0.3%. The main European stock market indexes have lost 0.8-1.0% so far. The S&P 500 futures contract (CFD) is in a short-term consolidation, as it fluctuates following Friday's move up. The nearest important resistance level is at around 1,890-1,900, marked by some previous levels of support, as we can see on the 15-minute chart:
The technology Nasdaq 100 futures contract (CFD) trades along the level of 3,800, following a rebound off last week's lows. The support level is at around 3,770-3,780, among others. For now, it looks like an upward correction within a short-term downtrend, as the 15-minute chart shows:
Concluding, the broad stock market bounced off sharply, following recent move down. There are still some short-term oversold conditions which may lead to an upward correction or downtrend reversal. We prefer to be out of the market at this moment, as we expect more short-term volatility. We will let you know when we think it is safe to get back in the market.