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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 Remain Within Medium-Term Consolidation - Which Direction Is Next?

Stock Trading Alert originally published on January 22, 2015, 6:35 AM:


Briefly: In our opinion, no speculative positions are justified.

Our intraday outlook remains 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 0.2-0.5% on Wednesday, extending their short-term move up, as investors reacted to quarterly corporate earnings releases, economic data announcements, among others. The S&P 500 index remains above the level of 2,000, which is positive. The nearest important resistance level is at around 2,030-2,050, marked by previous consolidation. On the other hand, level of support is at 1,990-2,000, marked by this month's local lows, as we can see on the daily chart:

S&P500 Daily Chart
Larger Image

Expectations before the opening of today's trading session are positive, with index futures currently up 0.2-0.3%. The main European stock market indexes have been mixed between -0.3% and +0.3% so far, ahead of ECB policy decision announcement. Investors will also wait for some economic data releases: Initial Claims at 8:30 a.m., FHFA Housing Price Index at 9:00 a.m. The S&P 500 futures contract (CFD) is in an intraday uptrend, as it trades along the level of 2,030. The nearest important level of support is at 2,015-2,020, marked by recent local lows:

S&P500 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract (CFD) is slightly below the level of resistance at 4,200. On the other hand, support level remains at around 4,150-4,170. There have been no confirmed short-term negative signals so far, as technology stocks remain in a rebound-mode:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market slightly extended its short-term move up on Wednesday, as the S&P 500 index got closer to the level of resistance at 2,030-2,050. For now, it looks like a volatile medium-term consolidation following last year's October-November rally. We prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.

Thank you.


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