Stock Trading Alert originally published on June 30, 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 main U.S. stock market indexes gained between 1.6% and 1.7% on Wednesday, extending their short-term uptrend, as investors reacted to some economic data releases, among others. The S&P 500 index retraced most of its recent "Brexit" move down, as it broke above resistance level of 2,050. The nearest important level of support is at around 2,040, marked by yesterday's daily gap up of 2,036.09-2,042.69. The next support level is at 2,000. On the other hand, resistance level is at around 2,080-2,100, marked by recent consolidation. The next level of resistance remains at 2,110-2,120, marked by this month's local highs. Last year's highs along the level of 2,100 continue to act as medium-term resistance level. Is this some long-term topping pattern or just medium-term consolidation following a rebound off February low?
Expectations before the opening of today's trading session are slightly positive, with index futures currently up 0.2%. The European stock market indexes have gained 0.1-0.6% so far. Investors will now wait for some economic data releases: Initial Claims at 8:30 a.m., Chicago PMI number at 9:45 a.m. The S&P 500 futures contract trades within an intraday consolidation, as it currently fluctuates along the level of 2,070. The nearest important level of support is at 2,055-2,060, and the next support level remains at 2,030, marked by short-term consolidation. On the other hand, resistance level is at around 2,100-2,120, as we can see on the 15-minute chart:
The technology Nasdaq 100 futures contract follows a similar path, as it currently trades along the level of 4,360, following a rebound off support level at around 4,330-4,350. The nearest important level of resistance is at 4,370-4,380, marked by local highs, as the 15-minute chart shows:
Concluding, the broad stock market retraced most of its recent move down yesterday, as investors shrugged off "Brexit" news. For now, it looks like an upward correction following recent selloff. We decided to close our speculative short position (opened on June 1 at 2,093.94 - S&P 500 index) at the opening of last week's Friday's trading session - the average opening price of the S&P 500 index was at 2,060. Overall, we gained around 34 index points on that trade. 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.