• 3 hours Gold Miners Eye Big Third Quarter Profits
  • 9 hours The U.S. Doubles Down On Domestic Lithium Production
  • 1 day Reddit Trader Scores 14,000% Returns On Rogue Trade
  • 2 days The Tangled Web Stretching From Turkey To DC
  • 2 days The U.S. Dollar Eyes Greater Upside
  • 2 days More And More Americans Believe A Recession Is Looming
  • 2 days Is The Pot Stock Boom Over Already?
  • 3 days How The California Utility Crisis Could Have Been Avoided
  • 3 days The Ugly Truth About Investing In Private Equity Deals
  • 4 days The World Is Facing A $1 Trillion Food Waste Crisis
  • 4 days Is It Time To Buy The Dip In Gold?
  • 4 days The History Of Oil Markets
  • 5 days Three Stocks To Watch Ahead Of Earnings Season
  • 5 days Markets Flat As Bulls And Bears Battle It Out
  • 5 days The Mining Industry Still Has a Human Rights Problem
  • 6 days 5 Billionaires Booted From Their Own Companies
  • 6 days Can Toyota's Hydrogen Car Take On Tesla?
  • 7 days Why Universal Basic Income Won't Work
  • 8 days Is This The Real Golden State?
  • 8 days Blockchain Firm Pushes For Ethical Mining
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

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 Broke Below Their Two Month Long Consolidation - New Downtrend?

Stock Trading Alert originally published on September 12,  2016, 6:57 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 lost 2.1-2.6% on Friday, breaking below their two-month-long consolidation, as investors' sentiment worsened following Fed rate hike fears, among others. The S&P 500 index broke below support level of 2,150-2,160, marked by previous local lows. It got back slightly below its last year's high at around 2,135. The nearest important level of resistance is at 2,150, marked by recent support level. On the other hand, potential level of support is at 2.100-2,120, marked by some previous local highs. Is this a new medium-term downtrend, or just quick downward correction within an over half-year long uptrend?

S&P500 Futures Daily Chart
Larger Image

Expectations before the opening of today's trading session are negative, with index futures currently down 0.6-0.8%. The European stock market indexes have lost 1.4-2.0% so far. The S&P 500 futures contract trades within an intraday downtrend, as it continues its Friday's decline. The nearest important level of resistance is at around 2,125, marked by Friday's daily low. On the other hand, support level is at 2,100 mark. There have been no confirmed positive signals so far. However, we can see some short-term overbought conditions:

S&P500 Futures 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract follows a similar path, as it extends its last week's sell-off. The nearest important resistance level is at around 4,670-4,680. On the other hand, support level is at 4,600-4,620, among others. There have been no confirmed short-term positive signal so far:

NASDAQ100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market broke below its two-month-long consolidation on Friday, as the S&P 500 index got back below its last year's high of 2,135. We continue to maintain our already profitable 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