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 gained between 1.1% and 1.7% on Monday, as investors reacted to Greece debt deal announcement. The S&P 500 index retraced more of its late June decline, as it got close to the level of 2,100. The nearest important level of resistance is at around 2,100, and the next resistance level is at 2,120. On the other hand, level of support remains at 2,080, marked by previous resistance level:
Expectations before the opening of today's trading session are virtually flat. The main European stock market indexes have lost 0.2-0.5% so far. Investors will now wait for economic data announcements: Retail Sales at 8:30 a.m., Business Inventories at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday consolidation, following yesterday's rally. The nearest important level of support is at 2,085-2,090, and resistance level is at 2,100, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades slightly below the level of 4,500. The nearest important level of support remains at 4,450-4,470, as we can see on the 15-minute chart:
Concluding, the broad stock market bounced sharply yesterday, as investors reacted to Greece debt deal announcement. We continue to maintain our speculative short position (2,098.27, S&P 500 index), as we expect a medium-term 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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