• 2 mins Unpacking Biden's Energy Plan
  • 4 hours Russia Aims To Become World's Top Gold Producer
  • 20 hours Global Tech Stocks On Edge Over Trump TikTok Ban
  • 1 day Cobalt Squeeze Threatens The Electric Vehicle Boom
  • 2 days COVID Has Sparked A Surge In Cybercrime
  • 2 days Precious Metals Bulls Still Have Plenty Of Room To Run
  • 3 days The U.S. Has The Tech To Go Green, But Will It Use It?
  • 3 days Massive Losses Force Russian Commodities Giant To Slash Dividends
  • 4 days Markets Up On Stimulus Hope
  • 4 days UK To Invest In Europe's First Geothermal Lithium Recovery Plant
  • 5 days TikTok Takes Center Stage In US-China Tech War
  • 5 days Are Semiconductor Stocks Overvalued?
  • 6 days Jobs Report Doesn’t Say Much Amid COVID Uncertainty
  • 6 days Crypto FOMO Heats Up As Bitcoin Climbs Above $11,000
  • 7 days Aluminum Is Bouncing Back In China
  • 7 days The Deep-Sea Mining Debate
  • 8 days Markets Trending Down Despite Tech Blow-Out
  • 8 days Big Oil Battered On Dismal Earnings
  • 9 days Russian Billionaire Bails On Mid-Sized Gold Miner
  • 9 days Gold Stocks Gear Up For A Big Autumn
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

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…

Contact Author

  1. Home
  2. Markets
  3. Other

Stock Trading Alert: Stocks Extended Their Short-Term Downtrend But Will They Continue Lower?

Stock Trading Alert originally published on May 9, 2016, 6:54 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 gained 0.3-0.5% on Friday, retracing some of their recent move down, as investors reacted to Monthly Nonfarm Payrolls data release, among others. However, the S&P 500 index has extended its short-term downtrend, before bouncing off support level at around 2,030-2,040. The nearest important level of resistance is at 2,060, marked by last week's consolidation. The next resistance level remains at 2,070-2,075, marked by the late April short-term consolidation. Is this the end of two-month long uptrend? Or is it just a correction before another leg up reaching last year's all-time high? Last year's highs along the level of 2,100 continue to act as medium-term resistance level, as we can see on the daily chart:

S&P500 Futures Daily Chart
Larger Image

Expectations before the opening of today's trading session are positive, with index futures currently up 0.2-0.3%. The European stock market indexes have gained 0.5-1.9% so far. The S&P 500 futures contract trades within an intraday uptrend, as it gets closer to its level of resistance at 2,060, marked by recent local high. On the other hand, support level is at 2,030-2,040, marked by Friday's local low, among others. There have been no confirmed positive signals so far. However, we can see some short-term technical oversold conditions:

S&P500 Futures 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract follows a similar path, as it extends its Friday's rebound off support level at around 4,270-4,300. On the other hand, the nearest important level of resistance is at 4,350-4,380, marked by some previous local highs. For now, it looks like an upward correction following recent downtrend:

NASDAQ100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market extended its short-term downtrend on Friday, before bouncing off support level, marked by the early April consolidation. The S&P 500 index remains relatively close to its last year's medium-term highs along the level of 2,100. Is this just a downward correction following over two-month long rally or new medium-term downtrend? The S&P 500 index continues to trade above its late March - early April local lows. It still looks like a downward correction, so 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.

 

Back to homepage

Leave a comment

Leave a comment