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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: Virtually Flat Expectations Ahead of Today's Shortened Trading Session

Stock Trading Alert originally published on December 31, 2015, 6:56 AM:


 

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,120 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 0.7-0.8% on Wednesday, retracing some of their recent move up, as investors took short-term profits off the table. The S&P 500 index continues to trade within two-month long consolidation following October rally. The nearest important level of resistance is at around 2,080-2,100, marked by previous local highs. On the other hand, support level is at 2,050, and the next important level of support is at 2,000-2,020, marked by local lows:

S&P500 Futures Daily Chart
Larger Image

Expectations before the opening of today's trading session are virtually flat. The main European stock market indexes have lost 0.3-1.1% so far. Investors will now wait for economic data announcements: Initial Claims at 8:30 a.m., Chicago PMI at 9:45 a.m. The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates along the level of 2,055. The nearest important level of support is at around 2,050, 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 currently trades along the level of 4,650. The nearest important level of resistance is at around 4,660-4,680. On the other hand, support level remains at 4,640-4,650, 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 up, as investors took short-term profits off the table. There have been no confirmed short-term negative signals so far. However, we can see some overbought conditions. Therefore, we continue to maintain our speculative short position (2,077.34, S&P 500 index). We expect a downward correction or short-term uptrend reversal. Stop-loss is at 2,120 and potential profit target is at 1,990. 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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