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Paul Rejczak

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: Positive Expectations Following Yesterday's Move Down, Will Uptrend Continue?

Stock Trading Alert originally published on December 3, 2015, 6:38 AM:


 

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140 and profit target at 1,990, 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): bearish
Long-term outlook (next year): bullish

The U.S. stock market indexes lost 0.6-1.1% on Wednesday, retracing their Tuesday's advance, as investors reacted to economic data releases, among others. The S&P 500 index bounced off resistance level of 2,100. The next important level of resistance is at around 2,130, marked by late May all-time high. On the other hand, support level is at 2,070, marked by previous local low. For now, it looks like a consolidation following October rally:

S&P500 Futures Daily Chart
Larger Image

Expectations before the opening of today's trading session are positive, with index futures currently up 0.6-0.7%. The main European stock market indexes have gained 0.3-1.3% so far. Investors will now wait for some economic data announcements: Initial Claims at 8:30 a.m., Factory Orders, ISM Services number at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it retraces yesterday's decline. The nearest important level of resistance is at around 2,100-2,105. On the other hand, support level is at around 2,075, as we can see on the 15-minute chart:

S&P500 Futures 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it retraces yesterday's move down. The nearest important level of resistance is at 4,730-4,740, marked by record highs. On the other hand, support level remains at 4,680-4,700, as the 15-minute chart shows:

NASDAQ100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market extended its short-term consolidation, as it retraced Tuesday's move up. Despite recent rally, there have been no confirmed positive signals so far. The S&P 500 index continues to trade below its last month's high. We continue to maintain our speculative short position (2,088.35, S&P 500 index). Stop-loss is at 2,140 and potential profit target is at 1,990 (S&P 500 index). 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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