Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,150 and profit target at 1,980, S&P 500 index)
Our intraday outlook is 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): neutral
Long-term outlook (next year): bullish
The U.S. stock market indexes were mixed between 0.0% and +0.5% on Tuesday, extending their short-term uptrend, as investors reacted to Fed's Janet Yellen's testimony. The S&P 500 index has managed to reach yet another new all-time high of 2,117.94. The nearest important level of support is at 2,100-2,110, marked by previous support level. There have been no confirmed negative signals so far. However, we can see overbought conditions accompanied by negative divergences:
Expectations before the opening of today's trading session are virtually flat. The main European stock market indexes have lost 0.1-0.3% so far. Investors will now wait for the New Home Sales number release at 10:00 a.m. The S&P 500 futures contract (CFD) is in an intraday consolidation as it continues to trade along the level of 2,110. The nearest important support level is at around 2,100, and resistance level is at 2,115-2,120, as we can see on the 15-minute chart:
The technology Nasdaq 100 futures contract (CFD) follows a similar path as it fluctuates along the level of 4,450. The nearest important level of support remains at around 4,430, marked by some recent local lows, as the 15-minute chart shows:
Concluding, the broad stock market reached another record level on Tuesday. There have been no confirmed negative signals. However, we continue to maintain our speculative short position (S&P 500 index), as we expect a downward correction or an uptrend reversal. Stop-loss is at 2,150, and potential profit target is at 1,980. 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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