Stock Trading Alert originally sent to subscribers on September 29, 2014, 6:11 AM.
Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,030 and profit target at 1,900, S&P 500 index)
Our intraday outlook is bearish, and our short-term outlook is bearish:
Intraday
(next 24 hours) outlook: bearish
Short-term (next 1-2 weeks) outlook: bearish
Medium-term (next 1-3 months) outlook: neutral
Long-term outlook (next year): bullish
The main U.S stock market indexes gained 1.0-1.2% on Friday, retracing some of their recent losses, as investors hoped for the end of a downward correction. The S&P 500 index bounced off the support level of 1,965, marked by recent local low. The nearest important level of resistance remains at around 1,980-1,985. The market continues to trade relatively close to its September 19th all-time high of 2,019.26. The resistance level is at 2,000-2,020. We can see some negative medium-term divergences, accompanied by overbought conditions:
Expectations before the opening of today’s session are negative, with index futures currently down 0.4-0.5%. The European stock market indexes have lost 0.2-0.3% so far. Investors will now wait for some economic data announcements: Personal Income, Personal Spending at 8:30 a.m., Pending Home Sales at 10:00 a.m. The S&P 500 futures contract (CFD) bounced off the resistance level at around 1,980. It currently trades closer to last week’s lows. The level of support remains at around 1,955, as we can see on the 15-minute chart:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades below Friday’s local high. The resistance level remains at around 4,050. On the other hand, the level of support is at 4,000, as the 15-minute chart shows:
Concluding, the broad stock market fluctuates following last week’s move down. There is no clear short-term direction. We remain bearish, expecting a downward correction or uptrend reversal. Therefore, we continue to maintain our already profitable speculative short position with entry point at 2,000.5 – S&P 500 index. The stop-loss is at the level of 2,030 and potential profit target is at 1,900 (S&P 500 index). 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.
Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts
