Briefly:

Intraday trade: The S&P 500 lost 2.1% on Friday, after opening 0.1% lower. The market will probably open slightly higher today. We may see an attempt at retracing some of the recent declines. But there have been no confirmed positive signals so far.

Trading position (short-term; our opinion): no positions are justified from the risk/reward perspective.

Our short-term outlook is neutral, and our medium-term outlook is neutral:

Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): neutral

Today's Stock Teading Alert will be shortened. We apologize for inconvenience.

The U.S. stock market indexes lost 1.8-3.0% on Friday, as they accelerated their sell-off following the Fed's Rate Decision release and a breakdown below two-month-long consolidation. The S&P 500 index fell the lowest since the early July of 2017 and it traded 18.1% below September the 21st record high of 2,940.91. The daily low was at 2,408.55. The Dow Jones Industrial Average lost 1.8% and the Nasdaq Composite lost 3.0% on Friday.

The broad stock market broke below its two-month-long trading range recently, as the S&P 500 index fell below the level of 2,600. Then the market accelerated lower and it got closer to 2,400 mark. The downward correction reached more than 18% from the September all-time high, surpassing January-February correction of around 12%. Is this a long-term bear market? For now, it looks like a medium-term downward correction. However, there have been no confirmed positive signals so far. The index fell below the February local low, as we can see on the daily chart:

Slightly Positive Expectations

The index futures contracts trade between +0.3% and +0.5% vs. their Friday's closing prices. So expectations before the opening of today's trading session are slightly positive. The European stock market indexes have been mixed so far. There will be no new important economic data announcements today. The broad stock market may fluctuate following the recent sell-off. There may be another attempts at retracing some of the recent decline. However, there have been no confirmed positive signals so far.

The S&P 500 futures contract trades within an intraday consolidation after retracing some of its Friday's sell-off overnight. The market bounced off 2,400 mark. The nearest important level of resistance is now at around 2,430-2,435, marked by the short-term local highs. On the other hand, the support level is at 2,400-2,415, among others. The futures contract trades slightly above its new medium-term low, as the 15-minute chart shows:

Nasdaq Bounces Off 6,000

The technology Nasdaq 100 futures contract follows a similar path, as it retraces some of its Friday's decline. The tech stocks' gauge is now 21% below the early October record high. The nearest important level of resistance is at around 6,100-6,150. On the other hand, the support level is at 6,000, among others. The Nasdaq futures contract trades below its short-term downward trend line, as we can see on the 15-minute chart:

The S&P 500 index further extended its downtrend on Friday, as it fell the lowest since the early July of 2017. The broad stock market was more than 18% below its September's record high. Is this a new long-term bear market or just medium-term downward correction? For now, it looks like a correction. However, there have been no confirmed positive signals so far.

Concluding, the S&P 500 index will likely open slightly higher today. We may see an attempt at retracing some of the recent sell-off. But for now, it may only look like another dead-cat-bounce upward correction.

Trading position (short-term; our opinion): no positions are justified from the risk/reward perspective.

Thank you.

Paul Rejczak
Stock Trading Strategist
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