Briefly:

Intraday trade: The S&P 500 index gained 0.6% after opening 0.2% higher on Tuesday. The broad stock market will likely open virtually flat today. We may see some more short-term fluctuations. Therefore, we prefer to be out of the market, avoiding low risk/reward ratio trades.

Trading position (short-term; our opinion): short positions in the S&P 500 Index (opened at the level of 2,810 on July the 30th) with a stop-loss order at 2,875 and the initial downside target at 2,768 are justified from the risk/reward perspective.

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

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

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

The broad stock market got close to its January's record high recently, as investors' sentiment improved following quarterly corporate earnings, economic data releases. The S&P 500 index traded within a relatively narrow trading range on last week's Tuesday-Thursday. Then it broke lower on Friday. Was it some medium-term downward reversal or just downward correction before another leg up? There are still two possible medium-term scenarios - bearish that will lead us towards the February low again, and the bullish one - breakout higher towards 3,000 mark. The latter one got very real recently. However, the S&P 500 index bounced of the resistance level marked by the January's record high last week:

Mixed Expectations Ahead of Economic Data Releases

Expectations before the opening of today's trading session are virtually flat, because the index futures contracts trade 0.1% below their Tuesday's closing prices. The European stock market indexes have been mixed so far. Investors will wait for series of economic data announcements today: Retail Sales, Empire Manufacturing Index, Productivity number at 8:30 a.m., Industrial Production, Capacity Utilization at 9:15 a.m., Business Inventories at 10:00 a.m., Crude Oil Inventories at 10:30 a.m. The broad stock market will probably open virtually flat. We may see some more short-term fluctuations within the recent trading range.

The S&P 500 futures contract trades within an intraday consolidation, as it extends its yesterday's fluctuations. The nearest important level of resistance is at around 2,840-2,845,  marked by the recent local highs. The resistance level is a also at 2,850. On the other hand, support level is at 2,825-2,830, marked by yesterday's local lows. The futures contract trades along its two-day-long upward trend line, as we can see on the 15-minute chart:

Concluding, the broad stock market will likely open virtually flat today. We may see some more short-term uncertainty following last week's Friday's decline. The S&P 500 index continues to fluctuate above its late July short-term consolidation. It acts as a support level. For now, it looks like a downward correction following the early August advance.

Intraday trade:

No intraday position is justified from the risk/reward perspective today.

Trading position (short-term; our opinion): short positions in the S&P 500 Index (opened at the level of 2,810 on July the 30th) with a stop-loss order at 2,875 and the initial downside target at 2,768 are justified from the risk/reward perspective.

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts