More Short-Term Stock Market Uncertainty As Stocks Hover Along Last Year's Medium-Term Highs

By: Paul_Rejczak

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

Our intraday outlook is neutral, and our short-term outlook is neutral. Our medium-term outlook remains bearish, as the S&P 500 index extends its lower highs, lower lows sequence:

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): neutral

The U.S. stock market indexes lost 0.9-1.2% on Wednesday, retracing their Tuesday's move up, as investors continued to hesitate. The S&P 500 index extends its consolidation following February - April rally. The nearest important level of support is at around 2,050, and the next support level is at 2,030-2,040, marked by previous local lows. On the other hand, resistance level is at 2,080-2,085, marked by recent local highs. The next important level of resistance remains at 2,100-2,110, marked by late April highs. Last year's highs along the level of 2,100 continue to act as medium-term resistance level. Will the market break above these highs and continue its seven-year long bull market?

S&P500 Futures Daily Chart

Expectations before the opening of today's trading session are positive, with index futures currently up 0.5-0.6%. The European stock market indexes have gained 0.4-0.8% 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 an intraday uptrend, as it retraces some of its yesterday's decline. The nearest important level of resistance is at around 2,080. On the other hand, support level remains at 2,055-2,060, marked by recent fluctuations. For now, it looks like a downward correction within a short-term uptrend, as we can see on the 15-minute chart:

S&P500 Futures 15-Minute Chart

The technology Nasdaq 100 futures contract follows a similar path, as it retraces its yesterday's move down, following a rebound off support level at around 4,350. The nearest important level of resistance is at 4,400 marked by yesterday's local high, among others. The market trades within a consolidation following short-term uptrend, as the 15-minute chart shows:

NASDAQ100 Futures 15-Minute Chart

Concluding, the broad stock market extended its short-term consolidation yesterday, as the S&P 500 index retraced Tuesday's rally. However, there have been no confirmed negative signals so far. The index remains relatively close to last year's medium-term highs along the level of 2,100 and continues to trade above its late March - early April local lows. It still looks like a correction within a medium-term uptrend, so 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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