Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140 and profit target at 1,990, S&P 500 index)
Our intraday outlook is now bearish, and our short-term outlook is bearish:
Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): bearish
Long-term outlook (next year): bullish
The U.S. stock market indexes gained 0.9-1.2% on Wednesday, as investors reacted to FOMC's Rate Decision release. The S&P 500 index got closer to the resistance level of 2,100-2,130, marked by long-term highs. It continues to trade within its February - August consolidation. On the other hand, the nearest important level of support remains at around 2,020-2,050:
Expectations before the opening of today's trading session are negative, with index futures currently down 0.4-0.5%. The main European stock market indexes have lost 0.3-0.9% so far. Investors will now wait for some economic data announcements: Initial Claims, GDP - Advance number at 8:30 a.m., Pending Home Sales at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday downtrend, as it retraces some of its yesterday's advance. The nearest important level of resistance is at 2,080-2085, and support level is at 2,050, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it currently trades along the level of 4,650. The nearest important level of resistance is at 4,680, and support level is at 4,600, as we can see on the 15-minute chart:
Concluding, the broad stock market continued its short-term uptrend on Wednesday, following Fed's Rate Decision announcement. There have been no confirmed short-term negative signals so far. However, we can see some overbought conditions. Therefore, we decided to open a speculative short position at the opening of today's trading session (S&P 500 index). We expect a downward correction or short-term uptrend reversal. Stop-loss is at 2,140 and potential profit target is at 1,990. 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.
Paul Rejczak
Stock Trading Strategist
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