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Paul Rejczak

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: More Short-Term Fluctuations Following Earnings Releases

Stock Trading Alert originally published on October 20,  2016, 6:52 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 main U.S. stock market indexes were mixed between -0.1% and +0.2%, extending their short-term consolidation, as investors continued to hesitate following last week's move down. The S&P 500 index trades close to resistance level of 2,150. The next resistance level is at 2,170, among others. On the other hand, level of support is at 2,115-2,120, marked by previous local lows. The market continues to trade along medium-term upward trend line, as the daily chart shows:

S&P500 Daily Chart
Larger Image

Expectations before the opening of today's trading session are virtually flat. The main European stock market indexes have been mixed so far. Investors will now wait for some economic data announcements: Initial Claims, Philadelphia Fed number at 8:30 a.m., Existing Home Sales, Leading Indicators at 10:00 a.m. The S&P 500 futures contract trades within an intraday consolidation following yesterday's move up. The nearest important level of resistance is at around 2,140-2,150. On the other hand, support level is at 2,120-2,130, marked by some recent local lows, as we can see on the 15-minute chart:

S&P500 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures contract follows a similar path, as it currently trades within an intraday consolidation. The nearest important support level remains at around 4,800-4,820, marked by recent local low, among others. On the other hand, level of resistance is at 4,840-4,850, and the next resistance level is at 4,880-4,900, marked by an all-time high:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market slightly extended its short-term move up yesterday, as the S&P 500 index got close to resistance level of 2,150. It still looks like a consolidation following recent move down. 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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