Stock Market Mixed Expectations Following Friday's Move Down - Will It Continue Lower?

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 main U.S. stock market lost 0.4-1.1% on Friday, as investors reacted to some economic data announcements. The S&P 500 index got close to the level of 2,050 again. The nearest important level of support is at around 2,030-2,040, marked by previous local lows. The next important support level is at 2,000-2,020. On the other hand, resistance level is at 2,070-2,085, marked by last week's 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 medium-term highs and continue its seven-year long bull market?

S&P500 Futures Daily Chart

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 0.5-1.1% so far. Investors will now wait for some economic data announcements: Empire Manufacturing number at 8:30 a.m., NAHB Housing Market Index at 10:00 a.m. The S&P 500 futures contract trades within an intraday consolidation, following its Friday's decline. The nearest important level of resistance remains at around 2,050, marked by today's local high. The next resistance level is at 2,060, marked by Friday's local high. On the other hand, support level is at around 2,035-2,040, among others. The market trades close to its previous local low. Is this a bottoming pattern or just consolidation before another leg down? There have been no confirmed positive signals so far. But will it break below its previous lows?

S&P500 Futures 15-Minute Chart

The technology Nasdaq 100 futures contract trades within a similar intraday consolidation, as it continues to fluctuate above the level of 4,300. The nearest important level of support is at 4,300, and resistance level is at 4,350-4,360, marked by recent local highs, among others, as we can see on the 15-minute chart:

NASDAQ 100 Futures 15-Minute Chart

Concluding, the broad stock market extended its short-term downtrend on Friday. However, it has managed to stay above some previous week's local lows. It still looks like a correction following February - April rally. 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 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.

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.

* * * * *

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.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.