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Paul Rejczak

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Stock Trading Alert: Uncertainty Following Last Week's Wild Fluctuations

Stock Trading Alert originally published on November 14, 2016, 6:55 AM:


 

Briefly: In our opinion, no speculative positions are justified.

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

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

The main U.S. stock market indexes were virtually flat on Friday, as investors took short-term profits off the table, following recent volatility. The S&P 500 index broke above the resistance level of 2,150-2,160 on Wednesday, marked by previous local highs. The next resistance level is at 2,180-2,200, marked by record high. On the other hand, support level is at 2,100-2,120, marked by previous resistance level. The next important level of support remains at around 2,080, marked by recent local lows, as we can see on the daily chart:

S&P500 Daily Chart
Larger Image

Expectations before the opening of today's trading session are virtually flat, with index futures currently mixed between -0.1% and +0.2%. The European stock market indexes have gained 0.3-0.4% so far. The S&P 500 futures contract trades within an intraday downtrend, as it retraces an overnight move up. The nearest important support level is at around 2,140-2,150, marked by short-term local lows. The nearest important resistance level remains at 2,170-2,190, marked by medium-term highs.

S&P500 15-Minute Chart
Larger Image

The technology Nasdaq 100 futures is relatively weaker, as it currently trades closer to its recent local low below the level of 4,700. The nearest important resistance level is at around 4,780-4,800. On the other hand, support level is at 4,650, among others, as the 15-minute chart shows:

NASDAQ100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market fluctuated on Friday, as investors hesitated following recent rally. Will it continue higher, despite the relative weakness of technology stocks? We decided to close our profitable short position (opened on July 18 at 2,162 - S&P 500 index) at the opening of previous Friday's (November 4th) trading session - the average opening price of the S&P 500 index was at 2,085. Overall, we gained 77 index points on that over three-month-long speculative short trade following June - July rally off "Brexit" low. Currently, we prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.

Thank you.

 

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