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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: Investors' Sentiment Worsened Again - Will Stocks Continue Their Last Week's Downward March?

Stock Trading Alert originally published on July 27, 2015, 6:56 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 lost 0.9-1.1% on Friday, as investors reacted to quarterly earnings releases, economic data announcements. Our Friday's bearish intraday outlook has proved accurate. The S&P 500 index broke below the level of 2,100. The nearest important level of resistance is at around 2,090-2,100. On the other hand, support level is at around 2,040-2,060, marked by previous local lows. 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 negative, with index futures currently down 0.4-0.5%. The main European stock market indexes have lost between 0.2% and 1.4% so far. Investors will now wait for the Durable Orders number release at 7:30 a.m. The S&P 500 futures contract (CFD) trades within an intraday downtrend. The nearest important level of support is at around 2,070, and resistance level is at 2,080, among others, 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 continues its short-term downtrend. The nearest important level of resistance is at around 4,560, marked by local highs, as we can see on the 15-minute chart:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market continues its short-term downtrend, as investors react to quarterly earnings releases, economic data announcements. 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 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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