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Paul Rejczak

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Stock Trading Alert: Positive Expectations Following Asian Stocks Rebound

Stock Trading Alert originally published on July 9, 2015, 6:49 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 between 1.5% and 1.8% on Wednesday, as investors reacted to China's stocks selloff, among others. Our yesterday's bearish intraday outlook has proved accurate. The S&P 500 index has closed below the level of 2,050. The nearest important level of support is at 2,040-2,050, marked by March local lows. On the other hand, resistance level is at around 2,080-2,085, marked by recent local highs:

S&P500 Futures Daily Chart
Larger Image

Expectations before the opening of today's trading session are positive, with index futures currently up 1.0-1.2%. The European stock market indexes have gained 1.2-1.7% so far. Investors will now wait for the Initial Claims number release at 8:30 a.m. the S&P 500 futures contract (CFD) trades within an intraday uptrend, following yesterday's move down. The nearest important level of resistance is at 2,060, and the next resistance level is at 2,070-2,075, marked by local highs. On the other hand, support level is at 2,035-2,040, as the 15-minute chart shows:

S&P500 Futures 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it retraces some of its yesterday's decline. The nearest important level of resistance is at 4,400-4,420, and support level is at 4,330-4,350, as we can see on the 15-minute chart:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market extended its volatile short-term consolidation on Wednesday. For now, it looks like a flat correction within two-week-long downtrend. Therefore, we continue to maintain our already profitable speculative short position (2,098.27, S&P 500 index), as we expect a medium-term 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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