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Paul Rejczak

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Stock Trading Alert: Stocks Retraced Thursday's Decline - New Rally or More Sideways Action?

Stock Trading Alert originally published on December 7, 2015, 6:47 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 gained 2.1-2.4% on Friday, as investors reacted to better-than-expected Monthly Jobs Data release. The S&P 500 index has retraced its Thursday's sell-off. The nearest important resistance level is at around 2,100, and the next level of resistance is at 2,130, marked by late May all-time high. On the other hand, support level is at 2,070, and the next important level of support is at 2,020-2,050. 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 virtually flat, with index futures currently up 0.1%. The main European stock market indexes have gained 0.5-2.0% so far. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it extends its Friday's advance. The nearest important level of resistance is at 2,100, and support 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 currently trades close to record highs. The nearest important level of resistance is at 4,730-4,750, and support level remains at 4,700, as the 15-minute chart shows:

NASDAQ100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market retraced its Thursday's move down on Friday, as it extended short-term fluctuations. 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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