Indexes Extended Their Move Down, The Worst May Not Be Over

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,030 and 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 lost 1.3-1.6% on Wednesday, resuming their short-term downtrend, as investors continued to take profits following August rally, ahead of some economic data announcements, as expected. Our Wednesday’s intraday bearish outlook has proved accurate. The S&P 500 index broke below the support level of 1,960-1,965. The nearest important level of support is at around 1,930-1,940, marked by July-August bottoming consolidation. On the other hand, the resistance level is at 1,960, marked by recent short-term consolidation, as we can see on the daily chart:

Expectations before the opening of today’s session are slightly negative, with index futures currently down 0.1%. The main European stock market indexes have lost 0.3-0.4% so far. Investors will now wait for some economic data announcements: Initial Claims at 8:30 a.m., Factory Orders at 10:00 a.m. The S&P 500 futures contract (CFD) is in an intraday downtrend, as it gets closer to yesterday’s low. The nearest important support level is at around 1,930-1,935. On the other hand, the level of resistance is at 1,940-1,950, among others, as the 15-minute chart shows:

The technology Nasdaq 100 futures contract (CFD) remains in a downtrend, as it gets closer to yesterday’s low. The resistance level is at around 3,990-4,000, marked by previous level of support. There have been no confirmed positive signals so far:

Concluding, the broad stock market resumed its short-term downtrend, moving below recent consolidation. We remain bearish, expecting a downward correction or uptrend reversal. Therefore, we continue to maintain our already profitable speculative short position with entry point at 2,000.5 – S&P 500 index. 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.