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Paul Rejczak

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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: Stocks Extended Their Fluctuations - Correction Ahead?

Stock Trading Alert originally published on April 30, 2015, 6:20 AM:


 

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, 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 U.S. stock market indexes lost 0.4-0.6% on Wednesday, extending their short-term fluctuations, as investors reacted to FOMC Rate Decision announcement, among others. Our yesterday's bearish intraday outlook has proved accurate. The S&P 500 index continues to fluctuate along the level of 2,100, as it remains relatively close to its April 27 all-time high of 2,125.92. The nearest important level of resistance is at around 2,120-2,125. On the other hand, support level is at 2,095-2,100. There have been no confirmed negative signals so far. However, we can see negative technical divergences:

S&P500 Daily Chart
Larger Image

Expectations before the opening of today's trading session are negative, with index futures currently down 0.4%. The main European stock market indexes have lost 0.1-0.3% so far. Investors will now wait for some economic data announcements: Initial Claims, Personal Income, Personal Spending at 8:30 a.m., Chicago PMI at 9:45 a.m. The S&P 500 futures contract (CFD) trades within an intraday downtrend, as it fluctuates close to yesterday's low. The nearest important resistance level is at around 2,100-2,150, as the 15-minute chart shows:

S&P500 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades lower. The nearest important support level is at around 4,450. On the other hand, level of resistance is at 4,500, among others, as we can see on the 15-minute chart:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the S&P 500 index continued to fluctuate on Wednesday, as investors reacted to FOMC Rate Decision release. There have been no confirmed negative signals so far. However, we maintain our speculative short position (2,098.27, S&P 500 index), as we expect a downward correction or an uptrend reversal. Stop-loss is at 2,140, 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.

Thank you.

 

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