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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: Uncertainty Following Economic Data, Earnings Releases - SP500 Still Close To 2,100

Stock Trading Alert originally published on April 28, 2016, 6:52 AM:


 

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

Our intraday outlook is 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 -0.8% and +0.3% on Thursday, extending their short-term consolidation, as investors reacted to the FOMC Rate Decision announcement, quarterly earnings releases. The S&P 500 index continues to trade along the level of 2,100, following two-month long rally off February low at around 1,800. Is this just a flat correction within an uptrend or a topping pattern before some more meaningful downturn? The nearest important level of resistance is at 2,100-2,115, marked by last year's medium-term local highs. The next important level of resistance is at 2,120-2,135, marked by last year's May S&P 500's all-time high of 2,134.72. On the other hand, support level is at 2,075-2,080, marked by some short-term local lows, and the next level of support is at around 2,065, marked by the daily gap up of 2,065.05-2,065.92. There have been no confirmed negative signals so far. However, we still can see some technical overbought conditions:

S&P500 Futures Daily Chart
Larger Image

Expectations before the opening of today's trading session are negative, with index futures currently down 0.6-0.8%. The main European stock market indexes have lost 1.1-1.5% so far. Investors will now wait for some economic data announcements: GDP - Advance number, Initial Claims at 8:30 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it retraces its yesterday's move up. The nearest important level of resistance is at around 2,080, and the next resistance level remains at 2,090-2,100, marked by recent local highs, as we can see on the 15-minute chart:

S&P500 Futures 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract follows a similar path, as it retraces its yesterday's advance - despite better-than-expected Facebook's quarterly earnings release. The nearest important level of resistance is at around 4,450, marked by short-term local high. On the other hand, support level is at 4,370-4,400, marked by yesterday's low, among others, as the 15-minute chart shows:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market extends its short-term fluctuations, as the S&P 500 index trades slightly below 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. For now, it looks like a flat correction within two-month-long medium-term uptrend. 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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