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Paul Rejczak

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Stock Trading Alert: Slightly Negative Expectations Following Last Week's Rally

Stock Trading Alert originally published on March 23, 2015, 7:18 AM:


 

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

Our intraday outlook is now neutral, and our short-term outlook is neutral:

Intraday outlook (next 24 hours): neutral
Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): bullish

The U.S. stock market indexes gained between 0.7% and 0.9% on Friday, extending their short-term uptrend, as investors hoped for more gains following a positive reaction to last week's Fed Rate Decision announcement. The S&P 500 index is relatively close to its February 25 all-time high of 2,119.59. The nearest important level of resistance is at around 2,100-2,120. On the other hand, support level is at 2,080-2,090, marked by previous local extremes. For now, it looks like some further medium-term consolidation following October-November rally:

S&P500 Daily Chart
Larger Image

Expectations before the opening of today's trading session are slightly negative, with index futures currently down 0.1-0.3%. The main European stock market indexes have lost 0.4-1.3% so far. Investors will now wait for the Existing Home Sales number release at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday downtrend, as it retraces some of Friday's move up. The nearest important level of resistance is at around 2,100-2,105, marked by some local highs. On the other hand, support level is at 2,075-2,080, among others, as we can see on the 15-minute chart:

S&P500 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract (CFD) follows a similar path as it retraces some of its Friday's advance. The nearest important level of resistance is at around 4,460-4,470, and support level remains at around 4,410, marked by Thursday's local lows, as the 15-minute chart shows:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market extended its short-term uptrend on Friday. However, we can see some profit taking following recent move up. There have been no confirmed negative signals so far. For now, it looks like some further 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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