Mixed Expectations Following Last Week's Bounce – Will Uptrend Extend?

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 1,975 and profit target at 1,875, 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 gained 0.7-0.8% on Friday, extending their recent move up, as investors reacted to some quarterly corporate earnings releases. The S&P 500 index remains within its late September – early October consolidation. The nearest important level of resistance is at around 1,870-1,880, marked by some previous local highs. On the other hand, support level is at 1,930-1,950, among others, as we can see on the daily chart:

Expectations before the opening of today’s trading session are slightly negative, with index futures currently down 0.1-0.2%. The main European stock market indexes have lost between 0.3% and 0.4% so far. Investors will now wait for the Pending Home Sales number at 10:00. The S&P 500 futures contract (CFD) fluctuates following Friday’s move up. The resistance level is at around 1,965, marked by local high, and the nearest important level of support is at 1,950, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it fluctuates along the level of 4,040. The resistance level is at around 4,050, and the level of support remains at 4,000-4,020, among others. There have been no confirmed short-term uptrend reversal signals so far, however, we can see some overbought conditions:

Concluding, the broad stock market extended its recent move up, as investors reacted to better-than-expected quarterly earnings releases. The S&P 500 index is within its late September – early October consolidation, testing resistance level. We expect short-term uptrend reversal. Therefore, we continue to maintain our speculative short position. Stop-loss level is at 1,975, and potential profit target is at 1,875 (S&P 500 index). It is important to set some exit price level in case some events cause the price to move in an unlikely direction. Having safety measures in place helps limit potential losses while letting gains grow.