Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,085 and profit target at 1,950, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish:

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

The U.S. stock market indexes were mixed between 0.0% and +0.8% on Monday, hovering near their all-time highs, as investors remained optimistic after series of strong economic data releases. The S&P 500 index is slightly below Friday’s all-time high of 2,071.46. Potential resistance level is at around 2,080-2,100. On the other hand, the nearest important level of support is at 2,050-2,055, marked by previous resistance level, and the next support level is at around 2,040. There have been no confirmed negative signals so far, however, we can see overbought conditions accompanied by negative divergences:

Expectation before the opening of today’s trading session are slightly positive, with index futures currently up 0.1-0.2%. The main European stock market indexes have gained 0.2-0.9% so far. Investors will now wait for some economic data announcements: GDP at 8:30 a.m., Case-Shiller 20-city Index, FHFA Housing Price Index at 9:00 a.m., Consumer Confidence at 10:00 a.m. The S&P 500 futures contract (CFD) trades close to its all-time highs, as it is moves along the level of 2,070. The nearest important level of support is at around 2,060-2,065, marked by recent local lows, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it is close to long-term high. Potential resistance level is at 4,300. On the other hand, the nearest important level of support is at around 4,270-4,280, and the next support level is at 4,250, among others, as the 15-minute chart shows:

Concluding, the broad stock market continues its long-term uptrend. There have been no confirmed negative signals so far. However, we still expect a downward correction or an uptrend reversal. Therefore, we continue to maintain our speculative short position. Stop-loss is at 2,085 and potential profit target is at 1,950 (S&P 500 index). 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
Stock Trading Alerts