Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,210, and profit target at 2,050, S&P 500 index).
Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook is now neutral, following S&P 500 index breakout above last year’s all-time high:
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): neutral
The main U.S. stock market indexes gained between 0.2% and 1.2% on Wednesday, extending their short-term uptrend, as investors reacted to quarterly corporate earnings releases. The S&P 500 index has reached yet another new all-time high at the level of 2,175.63. The nearest important level of resistance is at 2,170-2,175, and the next potential resistance level is at 2,200. On the other hand, support level is at around 2,150-2,155, marked by short-term local lows. The next important support level is at 2,130-2,135, marked by previous level of resistance. There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions accompanied by negative technical divergences:
Expectations before the opening of today’s trading session are virtually flat, with index futures currently down 0.1%. The European stock market indexes have lost 0.2-0.3% so far. Investors will now wait for some economic data announcements: Initial Claims, Philadelphia Fed 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 trades within an intraday consolidation, following yesterday’s advance. The nearest important level of resistance is at around 2,170. On the other hand, support level is at 2,150-2,160, among others, as we can see on the 15-minute chart:
The technology Nasdaq 100 futures contract follows a similar path, as it currently trades within an intraday consolidation along the level of 4,650. The nearest important level of resistance is at around 4,660-4,670. On the other hand, support level remains at 4,600, among others, as the 15-minute chart shows:
Concluding, the broad stock market extended its short-term uptrend on Wednesday, as investors reacted to quarterly corporate earnings releases. The S&P 500 index trades close to its new all-time high. We still can see short-term overbought conditions accompanied by bearish technical divergences. Therefore, we continue to maintain our speculative short position (opened on Monday at around 2,162 – Monday’s average opening price of the S&P 500 index). Stop-loss level is at 2,210 and potential profit target is at 2,050 (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 (NYSE:SPY) – 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.