S&P 500 Still At 2,100 Mark - Which Direction Is Next?

By: Paul_Rejczak

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, and profit target at 2,000, S&P 500 index).

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

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): neutral

The U.S. stock market indexes lost 0.2-0.5% on Friday, as investors reacted to Nonfarm Payrolls number release, among others. The S&P 500 index remains relatively close to the level of 2,100, as it extends its short-term consolidation. The nearest important resistance level is at 2,110-2,115, marked by April's local high of 2,111.05. The next resistance level is at around 2,130, marked by last year's all-time high of 2,134.72. On the other hand, support level is at 2,070-2,085, marked by previous level of resistance. The next important level of support is at 2,030-2,050. 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. The European stock market indexes have been mixed so far. The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates along the level of 2,100. The nearest important level of resistance is at around 2,150, marked by local highs. On the other hand, support level is at 2,080-2,090, marked by Friday's fluctuations. The market extends its short-term consolidation following late May rally. Is this a topping pattern or just flat correction before another leg up?

S&P500 Futures 15-Minute Chart

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation. The nearest important level of support is at around 4,500, and the next support level is at around 4,480, marked by Friday's daily low, as we can see on the 15-minute chart:

NASDAQ100 Futures 15-Minute Chart

Concluding, the broad stock market extended its short-term fluctuations on Friday, following Monthly Jobs data announcement. We can see technical overbought conditions that may lead to uptrend's reversal or downward correction. Therefore, we continue to maintain our speculative short position (opened at 2,093.94 - last Wednesday's opening price of the S&P 500 index). Stop-loss level is at 2,140 and potential profit target is at 2,000 (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.

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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