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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: Highest Since Early November - Will It Continue Even Higher?

Stock Trading Alert originally published on April 21, 2016, 6:42 AM:


 

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

Our intraday outlook is now neutral, and our short-term outlook is neutral. Our medium-term outlook remains bearish, as the S&P 500 index extends its lower highs, lower lows sequence:

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): neutral

The U.S. stock market indexes were mixed between 0.0% and +0.2% on Wednesday, extending their short-term uncertainty ahead of quarterly corporate earnings releases, among others. The S&P 500 index extended its short-term uptrend as it got closer to early November local high of 2,116.48. The next important level of resistance is at 2,120-2,135, marked by some previous highs, including last year's May S&P 500's all-time high of 2,134.72. On the other hand, support level is at 2,065-2,070, marked by recent consolidation. There have been no confirmed negative signals so far. However, we can see some technical overbought conditions. But will the market break above its last year's all-time high?

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 0.6% so far. Investors will now wait for some economic data announcements: Initial Claims, Philadelphia Fed number at 8:30 a.m., FHFA Housing Price Index at 9:00 a.m., Leading Indicators at 10:00 a.m. The S&P 500 futures contract trades within an intraday consolidation, following yesterday's move up. The nearest important level of resistance is at around 2,100-2,150, marked by local highs. On the other hand, support level is at 2,085-2,090, as we can see on the 15-minute chart:

S&P500 Futures 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract trades within an intraday consolidation, as it remains above the level of 4,500. The nearest important level of resistance is at around 4,550, marked by local highs. The nearest important level of support remains at 4,500 mark, as the 15-minute chart shows:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market extended its short-term uptrend on Wednesday, as the S&P 500 index remained above the level of 2,100. We still can see technical overbought conditions that may lead to uptrend's reversal or downward correction. However, there have been no confirmed short-term negative signals so far. Our speculative short position has been closed at the stop-loss level of 2,100 on Tuesday (S&P 500 index; the S&P 500 futures contract has reached its pre-session high at the level of 2,098 - 10 points above yesterday's daily high). We lost 54.44 index points on that trade, betting against over two-month-long uptrend. 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. Currently, 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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