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Paul Rejczak

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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: Closer To All-Time High, Will Uptrend Continue?

Stock Trading Alert originally published on October 3,  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 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 0.8-0.9% on Friday, extending their short-term fluctuations along local highs, as investors reacted to economic data releases, among others. The S&P 500 index continues to trade along its July - August consolidation, following its early September decline. The nearest important level of resistance is at around 2,170-2.180, marked by recent local high. On the other hand, support level is at around 2,140-2,150, marked by some local lows. The next important support level remains at 2,120. The market trades within a correction following recent rally. Will it continue its uptrend? Or is this some topping pattern before downward reversal?

S&P500 Daily Chart
Larger Image

Expectations before the opening of today's trading session are virtually flat, with index futures currently up 0.1%. The European stock market indexes have gained 0.3-1.1% so far. Investors will now wait for some of economic data announcements: ISM Index, Construction Spending at 10:00 a.m. The S&P 500 futures contract trades within an intraday consolidation following Friday's rally. The nearest important level of support is at around 2,150-2,160. The next support level is at 2,130-2,140, marked by local lows. On the other hand, resistance level is at 2,160-2,170, as we can see on the 15-minute chart:

S&P500 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract remains relatively stronger than the broad stock market, as it is close to its all-time high. It trades within an intraday consolidation along the level of 4,870. The nearest important support level is at around 4,850-4,870, marked by previous local highs. The nearest important resistance level is at 4,880-4,900, among others, as the 15-minute chart shows:

NASDAQ100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market retraced its Thursday's move down on Friday, as investors' sentiment improved again. Is this a new uptrend or just more medium-term consolidation? 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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