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

Our intraday outlook is 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 main U.S. stock market indexes lost between 0.1% and 0.3% on Tuesday, as they fluctuated within their Monday's trading range, following recent move down. The S&P 500 index remains slightly above its mid-January local low of 1,812.29. The nearest important level of support is at around 1,800-1,830. On the other hand, resistance level is at 1,870, marked by previous consolidation. There have been no confirmed positive signals so far. For now, it looks like a flat correction within a short-term downtrend. But will this move down continue below last month's low? Is this some kind of a bottoming pattern or just consolidation within three-month-long downtrend, just before another leg down? Last year's August - September lows continue to act as a 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 0.7-1.4%. The European stock market indexes have gained 1.0-2.3% so far. Investors will now wait for the Crude Inventories number announcement at 10:30 a.m., Fed's Janet Yellen Congressional Testimony. The S&P 500 futures contract trades within an intraday uptrend as it retraces some of its recent move down. The nearest important resistance level is at around 1,865-1,870, marked by previous local lows. On the other hand, support level is at 1,840-1,850, among others. Is this a short-term downtrend reversal, or just another upward correction? For now, it looks like an upward correction, however, we can see some positive action here:

The technology Nasdaq 100 futures contract trades along the level of 4,000 this morning. The technology index extended its medium-term downtrend on Monday, as it broke below last year's August low. The nearest important support level remains at around 3,950-3,970, and level of resistance is at 4,000. It looks like a correction within short-term downtrend, as we can see on the 15-minute chart:

Concluding, the broad stock market remained within its Monday's trading range yesterday. For now, it looks like a consolidation following recent move down. Will the S&P 500 index break below its mid-January low of 1,812.29? Or is this just a volatile bottoming consolidation before some more meaningful medium-term downtrend's reversal? For now, the index continues to trade along its last year's August - September local lows, as they act as a medium-term level of support. However, there have been no confirmed buy signals so far. We still 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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