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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: Positive Expectations Following Last Week's Rally - Will It Continue?

Stock Trading Alert originally published on July 20, 2015, 6:44 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 were mixed between -0.2% and 1.5% on Friday, as investors reacted to quarterly corporate earnings releases, economic data announcements. The S&P 500 index remains close to its late May 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 2,115-2,120, marked by previous resistance level. There have been no confirmed negative signals so far, however, we can see negative technical divergences:

S&P500 Futures Daily Chart
Larger Image

Expectations before the opening of today's trading session are slightly positive, with index futures currently up 0.2%. The main European stock market indexes have gained 0.4-1.1% so far. Investors will now wait for further corporate earnings releases. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it breaks above the level of 2,120. The nearest important level of support is at around 2,115-2,120, marked by last week's consolidation, 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 reaches new all-time highs. The nearest important level of support is at around 4,650, 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 fluctuations on Friday, as investors reacted to quarterly earnings releases. 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 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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