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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: SP500 Still At 2,100 Mark - Which Direction Is Next?

Stock Trading Alert originally published on June 6, 2016, 6:51 AM:


 

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, and profit target at 2,000, S&P 500 index).

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

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): neutral

The U.S. stock market indexes lost 0.2-0.5% on Friday, as investors reacted to Nonfarm Payrolls number release, among others. The S&P 500 index remains relatively close to the level of 2,100, as it extends its short-term consolidation. The nearest important resistance level is at 2,110-2,115, marked by April's local high of 2,111.05. The next resistance level is at around 2,130, marked by last year's all-time high of 2,134.72. On the other hand, support level is at 2,070-2,085, marked by previous level of resistance. The next important level of support is at 2,030-2,050. Last year's highs along the level of 2,100 continue to act as medium-term resistance level. Will the market break above these medium-term highs and continue its seven-year long bull market?

S&P500 Futures Daily Chart
Larger Image

Expectations before the opening of today's trading session are virtually flat. The European stock market indexes have been mixed so far. The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates along the level of 2,100. The nearest important level of resistance is at around 2,150, marked by local highs. On the other hand, support level is at 2,080-2,090, marked by Friday's fluctuations. The market extends its short-term consolidation following late May rally. Is this a topping pattern or just flat correction before another leg up?

S&P500 Futures 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation. The nearest important level of support is at around 4,500, and the next support level is at around 4,480, marked by Friday's daily low, as we can see on the 15-minute chart:

NASDAQ100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market extended its short-term fluctuations on Friday, following Monthly Jobs data announcement. We can see technical overbought conditions that may lead to uptrend's reversal or downward correction. Therefore, we continue to maintain our speculative short position (opened at 2,093.94 - last Wednesday's opening price of the S&P 500 index). Stop-loss level is at 2,140 and potential profit target is at 2,000 (S&P 500 index). 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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