• 346 days Will The ECB Continue To Hike Rates?
  • 346 days Forbes: Aramco Remains Largest Company In The Middle East
  • 348 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 748 days Could Crypto Overtake Traditional Investment?
  • 753 days Americans Still Quitting Jobs At Record Pace
  • 755 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 758 days Is The Dollar Too Strong?
  • 758 days Big Tech Disappoints Investors on Earnings Calls
  • 759 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 761 days China Is Quietly Trying To Distance Itself From Russia
  • 761 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 765 days Crypto Investors Won Big In 2021
  • 765 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 766 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 768 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 769 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 772 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 773 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 773 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 775 days Are NFTs About To Take Over Gaming?
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

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: Volatility Following Recent Rally - Which Direction Is Next?

Stock Trading Alert originally published on August 18,  2016, 6:53 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 U.S. stock market indexes gained 0.1-0.2% on Wednesday, extending their short-term fluctuations, as investors reacted to the FOMC Minutes release, among others. The S&P 500 index remains close to its Monday's new record high of 2,193.81. The nearest important level of resistance is at around 2,190-2,200. On the other hand, support level is at 2,165-2,170, marked by short-term local lows. The next support level  remains at 2,150. Will the market continue higher? Or is this some kind of a topping pattern before downward reversal? There have been no confirmed negative signals so far:

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 gained 0.1-0.5% so far. Investors will now wait for some economic data announcements: Initial Claims, Philadelphia Fed number at 8:30 a.m., Leading Indicators at 10:00 a.m. The S&P 500 futures contract trades within an intraday consolidation, following yesterday's rebound. The nearest important level of support is at around 2,165-2,170, marked by short-term local lows. On the other hand, resistance level remains at 2,180-2,190, 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 close to the level of 4,800, following yesterday's move up off support level at around 4,770. The nearest important level of resistance is at around 4,810-4,820, marked by previous short-term support level, as the 15-minute chart shows:

NASDAQ100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market extended its short-term downtrend yesterday, before bouncing off support level. We still can see overbought conditions accompanied by negative 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.

 

Back to homepage

Leave a comment

Leave a comment