Stock Trading Alert: Indexes Rebounded as Investors Hunted Bargains - Change of Trend or Just a Correction?

By: Paul Rejczak | Mon, Aug 11, 2014
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Stock Trading Alert originally published on August 11, 2014, 6:59 AM:


 

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 1,970 and a profit target at 1,850, S&P 500 index)

Our intraday outlook is bearish, and our short-term outlook is bearish, following a breakout below recent consolidation:

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

The U.S. stock market indexes gained between 0.8% and 1.2% on Friday, as investors hunted bargains following the recent move down. The S&P 500 index remains in a week-long consolidation, as it trades above the level of 1,900. The nearest important resistance level is at around 1,940, marked by recent local highs. On the other hand, the level of support remains at the psychological 1,900. For now, it looks like a relatively flat correction within a short-term downtrend, as the index is still below its recent downtrend's important retracements - Fibonacci's 38.2% at 1,937.9, 50% at 1,948.1. There have been no confirmed downtrend reversal signals so far, as we can see on the daily chart:

S&P500 Daily Chart
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Expectations before the opening of today's session are positive, with index futures currently up 0.4-0.5%. The main European stock market indexes have gained 0.8-1.4% so far. The S&P 500 futures contract (CFD) is in an intraday uptrend, as it retraces last week's decline. However, the nearest important level of resistance is at around 1,935, marked by previous local high. On the other hand, the support level is at around 1,915, among others, as the 15-minute chart shows:

S&P500 15-Minute Chart
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The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it trades close to the resistance level of 3,890-3,915. The support level remains at around 3,870. For now, it looks like an upward correction within a downtrend:

NASDAQ 100 Futures 15-Minute Chart
Larger Image

Concluding, the broad stock market is in a correction within its short-term downtrend. We continue to maintain our speculative short position, with stop-loss at 1,970, and a profit target of 1,850 (S&P 500 index). It is always important to set some exit price level in case your analysis is wrong or your trading method fails at some point in time.

Thank you.

 


 

Paul Rejczak

Author: Paul Rejczak

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts
SunshineProfits.com

Paul Rejczak

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.

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