Stock Trading Alert: Negative Expectations Following Last Week’s Move Up – Which Direction Is Next?

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Published : September 23rd, 2014
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Category : Technical Analysis

Stock Trading Alert originally sent to subscribers on September 22, 2014, 5:55 AM.

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,030 and a profit target at 1,900, S&P 500 index)

Our intraday outlook is bearish, and our short-term outlook is bearish:

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 were virtually flat on Friday, extending their short-term uncertainty, as investors continued to take some profits following recent move up. The S&P 500 index has managed to reach yet another new all-time high at the level of 2,019.26, before closing slightly below its early September top. There have been no confirmed negative signals, however, we still can see medium-term overbought conditions accompanied by negative technical divergences which are likely to lead to a correction:

24hGold - Stock Trading Alert:...

Expectations before the opening of today’s session are negative, with index futures currently down 0.3-0.6%. The main European stock market indexes have lost 0.2-0.6% so far. Investors will now wait for the Existing Home Sales number at 10:00 a.m. The S&P 500 futures contract (CFD) is in an intraday downtrend, as it retraces recent move up. The resistance level remains at around 2,010-2,015, and the nearest important level of support is at 1,990, marked by local low, as we can see on the 15-minute chart:

24hGold - Stock Trading Alert:...

The technology Nasdaq 100 futures contract (CFD) follows a quite similar path as it retraces last week’s gains. The level of resistance is at around 4,115-4,120. On the other hand, the nearest important support level is at 4,050-4,060, marked by previous local extremes, as the 15-minute chart shows:

24hGold - Stock Trading Alert:...

Concluding, the broad stock market resumed its uptrend as it reached new record high on Friday. However, we remain bearish, expecting a downward correction or uptrend reversal. Based on my experience, medium-term divergences seem more important than the lack of clarity for the short term. Therefore, we continue to maintain our speculative short position. The stop-loss is at the level of 2,030 and potential profit target is at 1,900 (S&P 500 index). 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.

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts

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Przemyslaw Radomski is the founder, owner and the main editor of www.SunshineProfits.com. Being passionately curious about the market’s behavior he uses his statistical and financial background to question the common views and profit on the misconceptions. “Don’t fight the emotionality on the market – take advantage of it!” is one of his favorite mottos. His time is divided mainly to analyzing various markets with emphasis on the precious metals, managing his own portfolio, writing commentaries, essays and developing financial software. Most of the time he’s got left is spent on reading everything he can about the markets, psychology, philosophy and statistics. Mr. Radomski has started investigating the markets for his private use well before starting his professional career. He used to work as an informatics consultant, but this time-consuming profession left him little time for his true passion – the interdisciplinary market analysis. Establishing www.SunshineProfits.com gave him the opportunity to put his thoughts, ideas, and experience into form available to other investors.
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