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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: More Uncertainty Following Last Month's Move Up - Which Direction Is Next?

Stock Trading Alert originally published on June 4, 2015, 6:02 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 main U.S. stock market indexes gained 0.2-0.4% on Wednesday, as investors reacted to some economic data announcements, among others. The S&P 500 index remains relatively close to its May 20 all-time high of 2,134.72. The nearest important level of resistance is at around 2,130-2,135. On the other hand, support level is at 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 0.6-0.8%. The European stock market indexes have lost 1.4-1.9% so far. Investors will now wait for economic data announcements: Challenger Job Cuts report at 7:30 a.m., Initial Claims, Productivity at 8:30 a.m. The S&P 500 futures contract (CFD) is in an intraday downtrend, as it trades close to the level of 2,100. The nearest important level of support is at 2,090-2,100, marked by recent local lows. On the other hand, resistance level is at 2,120, among others, as the 15-minute chart shows:

S&P500 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract (CFD) broke below the level of 4,500. The nearest important level of support is at around 4,480, marked by previous local lows. On the other hand, resistance level is at 4,530-4,550, as we can see on the 15-minute chart:

NASDAQ100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market extended its short-term consolidation on Wednesday, as the S&P 500 index got closer to its late May all-time high again. There have been no confirmed negative signals so far. However, we continue to 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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