Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,060 and profit target at 1,940, 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 lost 0.3-0.6% on Wednesday, as they retraced some of their recent move up. The S&P 500 index bounced off resistance level at around 2,020-2,050, marked by its February - August consolidation. The nearest important level of support is at 1,970-2,000. There have been no confirmed medium-term positive signals so far. It still looks like an upward correction following late August sell-off:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.3-0.4%. The European stock market indexes have been mixed so far. Investors will now wait for some economic data announcements: Initial Claims at 8:30 a.m., FHFA Housing Price Index at 9:00 a.m., Existing Home Sales, Leading Indicators at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday consolidation, as it retraces some of its yesterday's decline. The nearest important level of support is at 2,000-2,010. On the other hand, level of resistance is at 2,020, among others, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it fluctuates along the level of 4,400. The nearest important level of resistance is at 4,430-4,450, and support level is at 4,390-4,400, as we can see on the 15-minute chart:

Concluding, the broad stock market retraced some of its recent move up yesterday. There have been no confirmed medium-term positive signals so far. It looks like a correction following late August sell-off. We continue to maintain our already profitable short position (2,024.37, S&P 500 index), as we expect a downward correction or short-term uptrend reversal. Stop-loss is at 2,060 and potential profit target is at 1,940. 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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