Stocks Extend Fluctuations As Investors Remain Uncertain – Which Direction Is Next?

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,085 and profit target at 1,950, 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 mixed between -0.5% and 0.0% on Wednesday, extending their recent fluctuations as investors reacted to the release of FOMC Minutes, among others. The S&P 500 index remains relatively close to its Tuesday’s all-time high of 2,056.08. The nearest important resistance level is at around 2,050-2,060. On the other hand, level of support is at 2,040, marked by previous resistance level, and the next support level is at 2,020-2,025. There have been no confirmed negative signals so far, however we still can see some overbought conditions accompanied by negative divergences:

Expectations before the opening of today’s trading session are negative, with index futures currently down 0.4-0.5%. The main European stock market indexes have lost 0.7-1.4% so far. Investors will wait for some economic data announcements: Initial Claims, Consumer Price Index at 8:30 a.m., Existing Home Sales, Philadelphia Fed, Leading Indicators at 10:00 a.m. The S&P 500 futures contract (CFD) continues to trade along the level of 2,040. The nearest important level of resistance is at around 2,050, marked by recent highs. On the other hand, support level remains at 2,025-2,030, as the 15-minute chart shows: 

The technology Nasdaq 100 futures contract (CFD) retraced Tuesday’s move up, as it bounced off resistance level at around 4,250. The nearest important level of support is at 4,190-4,200. There have been no confirmed negative signals so far, however, we may see a topping pattern here:

Concluding, the broad stock market continues to fluctuate relatively close to its long-term highs. There have been no confirmed negative signals so far. However, we expect a downward correction or an uptrend reversal. Therefore, we continue to maintain our speculative short position. Stop-loss is at 2,085 and potential profit target is 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.