Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, 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 lost between 0.5% and 1.0%, as investors reacted to negative economic news concerning Greece debt deal. Our yesterday's bearish intraday outlook has proved accurate. The S&P 500 index continues its short-term downtrend, as it currently trades at the support level of 2,070-2,080. The nearest important level of resistance is at around 2,100, marked by previous local lows, among others. We still can see negative technical divergences:
Expectations before the opening of today's trading session are negative, with index futures currently down 0.3-0.5%. The main European stock market indexes have lost 0.5-1.5% so far. Investors will now wait for some economic data announcements: Wholesale Inventories, JOLTS Job Openings number at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday downtrend, as it continues its short-term move down. The nearest important level of resistance is at around 2,075-2,080. There have been no confirmed positive signals so far, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades close to the level of 4,400. The nearest important level of resistance remains at 4,450, marked by previous support level, as we can see on the 15-minute chart:
Concluding, the broad stock market extended its short-term downtrend on Monday. We continue to maintain our speculative short position (2,098.27, S&P 500 index), as we expect a downward correction or an uptrend reversal. Stop-loss is at 2,140, and potential profit target is at 1,980. 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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