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 0.2-0.3% on Monday, extending their short-term consolidation, as investors reacted to some further economic data announcements. The S&P 500 index remains relatively close to its May 20 all-time high of 2,134.72. The nearest important resistance level is at around 2,130-2,135. On the other hand, support level is at 2,100. There have been no confirmed negative signals so far. However, we still can see negative technical divergences:
Expectations before the opening of today's trading session are slightly negative, with index futures currently down 0.1-0.2%. The main European stock market indexes have lost 0.2-0.8% so far. Investors will now wait for the Factory Orders number release at 10:00 a.m. The S&P 500 futures contract (CFD) trades within an intraday consolidation, as it bounces off support level of 2,100. The nearest important resistance level is at 2,110-2,115, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades above the level of 4,500. The nearest important level of resistance is at 4,530-4,550, and support level is at 4,480-4,500, as we can see on th 15-minute chart:
Concluding, the broad stock market extended its short-term consolidation on Monday, as investors reacted to further economic data releases. There have been no confirmed negative signals so far. However, we continue to maintain our speculative short position (2,098.27, S&P 500 index), as we expect a 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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