Best of the Week
Most Popular
1.Canada Real Estate Bubble - Harry_Dent
2.UK House Prices ‘On Brink’ Of Massive 40% Collapse - GoldCore
3.Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - Nadeem_Walayat
4.Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - Marc_Horn
5.5 Maps That Explain The Modern Middle East - GEORGE FRIEDMAN
6.Gold Back With A Vengeance As Bitcoin Bubble Bursts - OilPrice_Com
7.Gold Summer Doldrums - Zeal_LLC
8.Crude Oil Trade & Nasdaq QQQ Update - Plunger
9.Gold And Silver – Why No Rally? Lies, Lies, And More Lies - Michael_Noonan
10.UK Election 2017 Disaster, Fake BrExit Chaos, Forecasting Lessons for Next Time - Nadeem_Walayat
Last 7 days
Sugar Commodity Investors: "Desperately Seeking..." Clarity and Objectivity - 28th Jul 17
When You Think It Can’t Get Worse, The Markets Become Even More Absurd - 27th Jul 17
US Dollar - Make Way For Uncle Buck - 27th Jul 17
Stock Market Levitation Continues... For Now - 27th Jul 17
Is Big Oil planning its Funeral by ignoring the obvious? - 27th Jul 17
Why Surging UK Household Debt Will Cause The Next Crisis - 27th Jul 17
Reconciling the US Dollar Outlook with the Super Bullish Gold and Silver COTs - 26th Jul 17
Last Week’s Rally in Gold Stocks Erased - 26th Jul 17
Dollar, Bitcoin, Markets - Is There A New Flight To Safety? - 26th Jul 17
Central Banks ARE The Crisis - 26th Jul 17
Iran: Public Image Versus Historical Reality - Part 1: An Abridged History to the 20th Century - 26th Jul 17
Trump Fails To Understand One Critical Thing—Our Trade Partners Have Options, Too - 26th Jul 17
Stock Market and Gold Stocks Trend Forecast Update - 25th Jul 17
Saving Illinois: Getting More Bang for Its Bucks - 24th Jul 17
3 Stocks Sectors That Will Win in The Fed’s Great Balance-Sheet Unwind - 24th Jul 17
Activist Investors Are Taking Over Wall Street, Procter and Gamble Might Never Remain the Same - 24th Jul 17
Stock Market Still on Track - 24th Jul 17
Last Chance For US Dollar To Rally - 24th Jul 17
UK House Prices Momentum Crash Warns of 2017 Bear Market - Video - 22nd Jul 17
Crude Oil, Gold, ETFs & more: Pro-grade Market Forecasts - 22nd Jul 17
Warning: The Fed Is Preparing to Crash the Financial System Again - 21st Jul 17
Gold / Silver Shorts Extreme - 21st Jul 17
GBP/USD Bearish Factors - 21st Jul 17
Gold Hedges Against Currency Devaluation and Cost Of Fuel, Food, Beer and Housing - 21st Jul 17
Is It Worth Investing in Palladium? - 21st Jul 17
UK House Prices Momentum Crash Threatens Mini Bear Market 2017 - 21st Jul 17
The Fed May Show Trump No Love - 20th Jul 17
The 3 Best Asset Classes To Brace Your Portfolio For The Next Financial Crisis - 20th Jul 17
Gold Stocks and Bonds - Preparing for THE Bottom - 20th Jul 17
Millennials Can Punt On Bitcoin, Own Safe Haven Gold For Long Term - 20th Jul 17
Trump Has Found A Loophole To Rewrite Trade Agreements Without Anyone’s Permission - 20th Jul 17
Basic Materials and Commodities Analysis and Trend Forecasts - 20th Jul 17

Market Oracle FREE Newsletter

Crude Oil, Gold, ETFs & more: Pro-grade Market Forecasts

Stock Market Positive Expectations, But Will Uptrend Continue?

Stock-Markets / Stock Market 2017 May 04, 2017 - 11:49 AM GMT

By: Paul_Rejczak

Stock-Markets

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,410, and profit target at 2,200, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook remains neutral, following S&P 500 index breakout above last year's all-time high:

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


The U.S. stock market indexes were mixed between -0.3% and 0.0% on Wednesday, extending their short-term consolidation, as investors reacted to economic data including the FOMC Rate Decision announcement, quarterly corporate earnings releases. The S&P 500 index remains close to its March 1 all-time high of 2,400.98. It has closed around 0.5% below that record high on Wednesday. Will the broad stock market index continue its eight-year-long bull market? The Dow Jones Industrial Average remained below the level of 21,000, and the technology Nasdaq Composite index fluctuated slightly below the level of 6,100, along its new record high. The nearest important level of support of the S&P 500 index remains at 2,375-2,380, marked by last Tuesday's daily gap up of 2,376.98-2,381.15. The next support level is at 2,355-2,370, marked by last Monday's daily gap up. The support level is also at around 2,350, marked by short-term consolidation. On the other hand, the nearest important level of resistance is at 2,400, marked by record high, among others. We can see some volatility following five-month-long rally off last year's November low at around 2,100. Is this a topping pattern before medium-term downward reversal? The uptrend accelerated on March 1 and it looked like a blow-off top pattern accompanied by some buying frenzy. The S&P 500 index is currently trading along its medium-term upward trend line, as we can see on the daily chart:

Expectations before the opening of today's trading session are positive, with index futures currently up 0.3%. The main European stock market indexes have gained 0.5-0.9% so far. Investors will now wait for more quarterly corporate earnings releases, along with some economic data announcements: Initial Claims, Productivity, Trade Balance at 8:30 a.m., Factory Orders at 10:00 a.m. The market expects that the Initial Claims were at 250,000 last week, and Factory Orders grew 0.4% in March. The S&P 500 futures contract trades within an intraday uptrend, as it retraces its recent move down. It remains within a short-term consolidation following last week's Monday's rally. The nearest important level of support remains at around 2,375-2,380, marked by short-term local lows. The next support level is at 2,365, marked by last week's consolidation. On the other hand, resistance level is at around 2,390-2,400, marked by March topping consolidation, and an all-time high slightly above 2,400 mark. Will the market break above two-month long consolidation? Or is this just another upward correction? We can see some medium-term negative technical divergences, but will they lead to a downward correction?

The technology Nasdaq 100 futures contract remains relatively stronger than the broad stock market, as it currently trades just 0.3-0.4% below its record high of around 5,640, following better-than-expected quarterly corporate earnings releases. The nearest important support level is at around 5,600, marked by previous level of resistance. The next support level is at 5,575, marked by short-term local lows. The support level is also at 5,540-5,560, marked by previous consolidation. On the other hand, level of resistance is at around 5,640-5.650. There have been no confirmed negative signals so far. However, we can see short-term overbought conditions:

Concluding, the S&P 500 index extended its short-term consolidation on Wednesday, as it continued to trade just 0.5% below its early March all-time high. The broad stock market remains relatively weaker than the record-breaking technology Nasdaq Composite index. Is this a short-term topping pattern or just quick profit-taking action before another leg up? Will the broad stock market continue towards new record highs? The index is currently trading along its five-month-long medium-term upward trend line. There have been no confirmed negative signals so far. However, we still can see medium-term negative technical divergences. Therefore, we continue to maintain our speculative short position (opened on February 15 at 2,335.58 - opening price of the S&P 500 index). Stop-loss level is at 2,410 and potential profit target is at 2,200 (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.

To summarize: short position in S&P 500 index is justified from the risk/reward perspective with the following entry prices, stop-loss orders and profit target price levels:

S&P 500 index - short position: profit target level: 2,200; stop-loss level: 2,410
S&P 500 futures contract (June) - short position: profit target level: 2,197; stop-loss level: 2,407
SPY ETF (SPDR S&P 500, not leveraged) - short position: profit target level: $220; stop-loss level: $241
SDS ETF (ProShares UltraShort S&P500, leveraged: -2x) - long position: profit target level: $15.47; stop-loss level: $12.98

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.

* * * * *

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.

Paul Rejczak Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife