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Paul Rejczak

Paul Rejczak

Writer, Sunshine Profits

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 Sell-off, But Will It Last?

Stock Trading Alert originally published on December 21, 2015, 6:49 AM:


 

Briefly: In our opinion, no speculative positions are justified.

Our intraday outlook is now 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 main U.S. stock market indexes lost 1.8-2.1% on Friday, extending their short-term uptrend, as investors continued their post-interest-rate-increase selling. The S&P 500 index got close to support level of 1,990-2,000, as it retraced its recent move up. The nearest important level of resistance is at around 2,040-2,050, marked by previous local lows. For now, it looks like a medium-term 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 0.8-0.9%. The European stock market indexes have gained 0.5-0.9% so far. The S&P 500 futures contract trades within an intraday uptrend, as it retraces some of its Friday's sell-off. The nearest important level of support is at around 1,990-2,000. On the other hand, resistance level is at 2,020-2,030, marked by previous local highs, as the 15-minute chart shows:

S&P500 Futures 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract follows a similar path, as it retraces some of Friday's decline. The nearest important level of resistance is at 4,570-4,580, and support level is at 4,500, as we can see on the 15-minute chart:

NASDAQ100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market continued its short-term downtrend on Friday, as the S&P 500 index got closer to 2,000 mark. However, it continues to trade within two-month long consolidation so far. We prefer to be out of the market, 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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