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Paul Rejczak

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Stock Trading Alert: Short-Term Uncertainty As Investors Await Economic Data Releases

Stock Trading Alert originally published on August 4, 2016, 6:38 AM:


 

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,210, and profit target at 2,050, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook is now neutral, following S&P 500 index breakout above last year's all-time high:

Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): neutral

The main U.S. stock market indexes gained 0.2-0.3% on Wednesday, retracing some of their recent move down, as investors reacted to economic data, quarterly earnings releases. The S&P 500 index continues to trade within a short-term consolidation following last month's rally. The nearest important level of support is at around 2,150, marked by Tuesday's daily low. The next important support level is at 2,130-2,135, marked by previous level of resistance. On the other hand, resistance level is at 2,170-2,175, marked by Monday's all-time high of 2,178.29. The next potential resistance level is at 2,200. For now, it looks like a relatively flat correction within medium-term uptrend. Will the market continue higher? Or is this some kind of a topping pattern before downward reversal?

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 following yesterday's rebound. The nearest important level of resistance is at around 2,160, marked by short-term local high. On the other hand, support level remains at 2,140-2,150, 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 currently trades along the level of 4,720. The nearest important support level is at around 4,700. On the other hand, resistance level is at 4,730, and the next resistance level is at 4,750-4,760, marked by local highs, as the 15-minute chart shows:

NASDAQ100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market continues to fluctuate following last month's rally. The S&P 500 index remains close to its new record high of 2,178.29. We still can see technical overbought conditions accompanied by bearish technical divergences. Therefore, we continue to maintain our speculative short position (opened on July 18th at 2,162, S&P 500 index). Stop-loss level is at 2,210 and potential profit target is at 2,050 (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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