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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: Is this A New Downtrend Or Just Another Pullback Within Medium-Term Consolidation?

Stock Trading Alert originally published on June 8, 2015, 6:41 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 lost 0.1-0.3% on Friday, slightly extending their short-term downtrend, as investors reacted to economic data announcements. The S&P 500 index continues to trade within a medium-term consolidation, following October-November rally. The nearest important level of resistance is at around 2,100-2,110, and support level is at 2,070-2,085, marked by previous local lows. 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 virtually flat. The European stock market indexes have been mixed so far. The S&P 500 futures contract (CFD) trades within an intraday consolidation, as it fluctuates along the level of 2,090. The nearest important level of resistance is at around 2,100 and support level is at 2,080, marked by local low, 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 fluctuates along the level of 4,480. The nearest important level of support remains at around 4,450, marked by Friday's local low. On the other hand, resistance level 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 broad stock market slightly extended its short-term move down on Friday. There have been no confirmed medium-term 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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