Positive Expectations Following Fed Decision Release

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,025 and profit target at 1,950, S&P 500 index).

Our intraday outlook remains 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 between 1.7% and 2.0% on Wednesday, retracing some of their recent move down, as investors reacted to FOMC Rate Decision release, among others. The S&P 500 index bounced off support level at around 1,970-1,975, marked by Tuesday’s daily low. It has returned above the level of 2,000, which is positive. The nearest important level of resistance is at around 2,025-2,035, marked by some previous local lows, as we can see on the daily chart:

Expectations before the opening of today’s trading session are positive, with index futures currently up 1.1-1.3%. The main European stock market indexes have gained 1.0-2.5% so far. Investors will now wait for some economic data announcements: Initial Claims at 8:30 a.m., Philadelphia Fed number, Leading Indicators at 10:00 a.m. The S&P 500 futures contract (CFD) is in an intraday uptrend, as it trades considerably higher this morning. The nearest important level of support remains at around 2,000-2,010. On the other hand, possible resistance level is at around 2,050, marked by some previous local extremes, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) follows a similar path, as it remains in an intraday uptrend. The nearest important support level is at 4,180-4,200. For now, it looks like a correction within a short-term downtrend, however a positive downtrend reversal scenario cannot be excluded here:

Concluding, the broad stock market bounced off support level, as the S&P 500 index continued to fluctuate along the level of 2,000 yesterday. Expectations before the opening of today’s trading session are very positive, however, we still continue to maintain our short position with entry point at 2,038 (November 12th opening price of the S&P 500 index). Stop-loss is at 2,025 and potential profit target remains at 1,950 (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.