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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: New Uptrend Or Just A Quick Upward Correction?

Stock Trading Alert originally published on June 11, 2015, 6:22 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 gained 1.2-1.3% on Wednesday, as investors reacted to news concerning Greece debt deal, among others. The S&P 500 index bounced off support level at 2,070-2,080. The nearest important level of resistance is at around 2,110-2,120, marked by local highs, and the next resistance level is at 2,130-2,135, marked by May 20 all-time high of 2,134.72. There have been no confirmed negative medium-term signals so far. However, we still 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 gained between 0.4% and 0.9% so far. Investors will now wait for series of economic data announcements: Initial Claims, Retail Sales at 8:30 a.m., Business Inventories at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday consolidation, following yesterday's rebound. The nearest important level of support is at around 2,100, and resistance level is at 2,115-2,120, marked by previous local highs, as the 15-minute chart shows:

S&P500 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract (CFD) trades along the level of 4,500. The nearest important level of resistance is at around 4,500. On the other hand, support level is at 4,450-4,470, among others, as we can see on the 15-minute chart:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market bounced sharply on Wednesday, as investors hunted for bargains following recent move down. 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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