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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: Uncertainty Following Recent Decline - Correction Or New Downtrend?

Stock Trading Alert originally published on August 27, 2015, 6:52 AM:


 

Briefly: In our opinion, no speculative positions are justified

Our intraday outlook is neutral, and our short-term outlook is neutral:

Intraday outlook (next 24 hours): neutral
Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): bearish
Long-term outlook (next year): bullish

The U.S. stock market indexes gained 3.9-5.1% on Wednesday, retracing some of their recent move down, as investors reacted to global stock exchanges rebound. The S&P 500 index remains within a volatile short-term trading range, following its 200-points sell-off. The nearest important level of resistance is at around 1,950, and support level is at 1,870-1,900. There have been no confirmed positive signals so far:

S&P500 Futures Daily Chart
Larger Image

Expectations before the opening of today's trading session are positive, with index futures currently up 1.2-1.5%. The main European stock market indexes have gained 2.3-3.2% so far. Investors will now wait for some economic data announcements: Initial Claims, GDP - Second Estimate at 8:30 a.m., Pending Home Sales at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it extends its yesterday's advance. The nearest important level of support is at around 1,900-1,930, and resistance level is at 1,970-2,000, 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 trades higher this morning. The nearest important level of resistance is at around 4,300. On the other hand, support level remains at 4,200, as we can see on the 15-minute chart:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market retraced some of its recent move down yesterday, however, it still trades within a volatile short-term consolidation, following relatively large sell-off. Our late April's short position's (2,098.27, S&P 500 index) profit target has been reached at the level of 1,980. Overall, we gained almost 120 index points on that pre-planned trade. We prefer to be out of the market at this moment, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.

Thank you.

 

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