Stock Market Negative Expectations Again, Following Asian Markets' Rout

By: Paul_Rejczak

Briefly: In our opinion, no speculative positions are justified.

Our intraday outlook is now neutral, and our short-term outlook is neutral:

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

The U.S. stock market indexes lost 0.9-1.5% on Wednesday, extending their recent move down, as investors reacted to economic data releases, oil prices decline. The S&P 500 index broke below 2,000 mark. The nearest important level of support is at 1,990-2,000, and the next potential support level is at around 1,950, marked by early October daily gap up, among others. On the other hand, level of resistance is at 2,000 mark, and the next important resistance level is at around 2,040, marked by Monday's daily gap down of 2,038.20-2,043.62. There have been no confirmed positive signals so far. However, we can see some short-term oversold conditions which may lead to an upward correction at some point:

Expectations before the opening of today's trading session are very negative, with index futures currently down 2.2-3.0%, as investors react to Chinese stock market, oil prices sell-off. The main European stock market indexes have lost 2.7-3.3% so far. Investors will now wait for the Initial Claims number release at 8:30 a.m. The S&P 500 futures contract trades within a sharp intraday downtrend, as it extends its recent sell-off. The nearest important level of resistance is at around 1,950-1,970, marked by previous local lows. On the other hand, potential support level is at 1,910-1,930, marked by some last year's local highs. There have been no confirmed positive signals so far. However, we can see short-term oversold conditions:

The technology Nasdaq 100 futures contract follows a similar path, as it accelerates its short-term downtrend. It currently trades close to 4,300 mark. The nearest important level of resistance is at around 4,350-4,400. There have been no confirmed short-term positive signals so far. The market broke below yesterday's intraday consolidation, as we can see on the 15-minute chart:

Concluding, the broad stock market is expected to open much lower today, as the index futures are down more than 2% right now. However, we can see some short-term technical oversold conditions. Therefore, we decided to close our profitable speculative short position (2,077.34, S&P 500 index) at the opening of today's cash market trading session. As of this morning, we prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.

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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