Stock Market New Downtrend or Just Another Pullback Within Two-Month Long Consolidation?

By: Paul_Rejczak

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,060 and profit target at 1,900, 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 main U.S. stock market indexes lost 1.8-2.3% on Friday, as investors reacted to economic data releases, among others. Our Friday's negative intraday outlook has proved accurate. The S&P 500 index broke below its mid-November local low, as it got closer to support level of 2,000. The nearest important level of resistance is at around 2,050, marked by previous local lows. for now, it looks like a medium-term consolidation following October rally:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.8-0.9%. The European stock market indexes have gained 0.7-1.1% so far. The S&P 500 futures contract (CFD) trades within an intraday uptrend, as it retraces some of its Friday's decline. The nearest important level of support is at around 2,000-2,010, and resistance level is at 2,030-2,040, among others, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it retraces some of its Friday's move down. The nearest important level of support is at 4,520-4,530, marked by local low. On the other hand, resistance level remains at around 4,600, as we can see on the 15-minute chart:

Concluding, the broad stock market accelerated its short-term downtrend on Friday, as the S&P 500 index got closer to 2,000 mark. We continue to maintain our already profitable speculative short position (2,088.35, S&P 500 index). However, we decided to move our stop-loss level to 2,060 and potential profit target level to 1,900 (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.

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts
SunshineProfits.com

Stock market strategist, who has been known for quality of his technical and fundamental analysis since the late nineties. He is interested in forecasting market behavior based on both traditional and innovative methods of technical analysis. Paul has made his name by developing mechanical trading systems. Paul is the author of Sunshine Profits’ premium service for stock traders: Stock Trading Alerts.

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Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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