More Uncertainty Ahead Of Quarterly Earnings Releases, Still Close To Last Year's Highs

Briefly: In our opinion, speculative short positions are favored (with stop‐loss at 2,100, and profit target at 1,950, S&P 500 index).

Our intraday outlook is bearish, and our short‐term outlook is bearish. Our mediumterm outlook remains bearish, as the S&P 500 index extends its lower highs, lower lows sequence:

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

The U.S. stock market indexes lost 0.1‐0.3% on Friday, extending their short‐term uncertainty as investors awaited quarterly corporate earnings, economic data releases. The S&P 500 index continues to trade close to its last year's local highs. The nearest important level of resistance is at around 2,100‐2,120. On the other hand, support level is at 2,030‐2,040, marked by recent consolidation, and the next level of support is at 2,000‐2,020, marked by previous level of resistance. The index continues to trade within a descending medium‐term trading channel. There have been no confirmed short‐term negative signals so far. However, we still can see overbought conditions:

Expectations before the opening of today's trading session are slightly negative, with index futures currently down 0.2‐0.3%. The main European stock market indexes have been mixed so far. The S&P 500 futures contract trades within an intraday uptrend, following lower opening. The nearest important level of support is at around 2,055‐ 2,060, marked by local low. On the other hand, resistance level is at 2,080, marked by Friday's local high, among others. There have been no confirmed negative signals so far. However, we can see some overbought conditions accompanied by an increased volatility. Is this a short‐term topping action?

The technology Nasdaq 100 futures contract follows a similar path, as it retraces its earlier decline. The nearest important level of resistance is at around 4,540‐4,560, marked by last week's local high. On the other hand, support level remains at 4,500, as we can see on the 15‐minute chart:

Concluding, the broad stock market was virtually flat on Friday, as investors remained uncertain ahead of quarterly corporate earnings releases. The S&P 500 index broke above its consolidation along the level of 2,050 recently. We still can see technical overbought conditions that may lead to uptrend's reversal or downward correction. Therefore, we continue to maintain our speculative short position (opened at 2,045.56 ‐ last week's Wednesday's opening price of the S&P 500 index). Stop‐loss level is at 2,100 and potential profit target is at 1,950 (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.