Briefly: In our opinion, no speculative positions are justified.

Our intraday outlook is now neutral, and our short-term outlook is neutral. Our medium-term outlook remains bearish, as the S&P 500 index extends its lower highs, lower lows sequence. We decided to change our long-term outlook to neutral recently, following a move down below medium-term lows:

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

The U.S. stock market indexes gained between 1.6% and 2.3% on Wednesday, extending their short-term uptrend, as investors reacted to economic data announcements, oil prices increase, among others. The S&P 500 index got closer to its early November local high of 1,947.20. The nearest important level of resistance is at around 1,950, and the next resistance level is at 1,980-2,000, marked by previous support level. On the other hand, support level is at 1,890-1,900, marked by yesterday's daily gap up of 1,895.77-1,898.80. The next support level is at 1,870, marked by Tuesday's daily gap up. For now, it looks like a consolidation following first half of January sell-off. Will it continue downwards? Or is the bullish downtrend's reversal scenario currently in play? Last year's August - September lows continue to act as medium-term support level, as we can see on the daily chart:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.5-0.6%. The main European stock market indexes have been mixed so far. Investors will now wait for some economic data announcements: Initial Claims, Philadelphia Fed number at 8:30 a.m., Crude Inventories at 11:00 a.m. The S&P 500 futures contract trades within an intraday uptrend, as it extends its short-term uptrend following a breakout above 1,900 mark. The nearest important level of support is at around 1,910-1,915, marked by local lows. On the other hand, potential resistance level is at 1,940-1,950. There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions:

The technology Nasdaq 100 futures contract follows a similar path, as it continues its recent move up. The nearest important level of support is at 4,180-4,200, and resistance level is at 4,250-4,300, marked by some previous local highs. the market trades along the level of 4,200, as the 15-minute chart shows:

Concluding, the broad stock market extended its short-term uptrend yesterday, as the S&P 500 index broke above the level of 1,900. The S&P 500 index trades along its last year's August - September local lows, as they act as medium-term level of support. There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions that may lead to a downward correction or uptrend's reversal at some point. Therefore, we decided to close our long position (S&P 500 index, opened at 1,835 - Thursday's average opening price of S&P 500 index) at the opening of today's cash market trading session. As of this morning, we prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.

Thank you.

Paul Rejczak
Stock Trading Strategist
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