Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140 and profit target at 1,990, 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): bearish
Long-term outlook (next year): bullish

The U.S. stock market indexes lost 1.0-1.1% on Monday, as investors took profits off the table following October rally. Our yesterday's bearish intraday outlook has proved accurate. The S&P 500 index retraced its late October - early November move up. The nearest important level of resistance is at around 2,100. On the other hand, support level is at 2,055-2,060, marked by October 23rd daily gap up of 2,055.20-2,058.19. There have been no confirmed negative signals so far. However, we still can see overbought conditions:

Expectations before the opening of today's trading session are negative, with index futures currently down 0.3-0.4%. The main European stock market indexes have lost 0.5% so far. Investors will now wait for the Wholesale Inventories number release at 10:00 a.m. The S&P 500 futures contract (CFD) trades close to its yesterday's intraday lows, as it retraces overnight bounce. The nearest important level of resistance is at 2,070-2,080, and support level is at 2,060-2,065, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it currently trades along yesterday's lows. The nearest important level of resistance is at 4,660, and support level is at 4,620, as we can see on the 15-minute chart:

Concluding, the broad stock market lost around 1% on Monday, as investors took profits of the table, following economic data releases, among others. We expect a downward correction or short-term uptrend reversal. Therefore, we continue to maintain our speculative short position (2,088.35, S&P 500 index). Stop-loss is at 2,140 and potential profit target is at 1,990 (S&P 500 index). 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.

There will be no Stock Trading Alert tomorrow, we apologize for inconvenience.

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts