Stock Trading Alert: Stocks Extend Short-Term Consolidation – Which Direction Is Next?

Posted by Paul Rejczak - Sunshine Profits

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The main U.S. stock market indexes were virtually flat on Friday, as investors continued to hesitate following recent advance, despite some important economic data releases.

Briefly: In our opinion, no speculative positions are justified.

Our intraday outlook is neutral, and our short-term outlook is neutral:

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

Our Friday’s neutral intraday outlook has proved accurate. However, the S&P 500 index has managed to reach yet another new all-time high at the level of 2,034.26. The nearest important level of resistance is at around 2,030-2,035. On the other hand, the support level is at 2,020, marked by previous high, and the next support level is at around 2,000. There have been no confirmed negative signals so far, however, we can see some overbought conditions which may lead to a downward correction:

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Expectations before the opening of today’s trading session are slightly positive, with index futures currently up 0.1-0.2%. The European stock market indexes have gained 0.3-0.5% so far. The S&P 500 futures contract (CFD) trades along the level of 2,025. The nearest important resistance level remains at around 2,035, and support level is at 2,020, among others:

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The technology Nasdaq 100 futures contract (CFD) extends its short-term consolidation, as it fluctuates along the level of 4,160. The resistance level is at 4,180, marked by local highs, and support level remains at 4,120-4,140, as we can see on the 15-minute chart:

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Concluding, the broad stock market extends its short-term consolidation, following recent move up. There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions which may lead to a downward correction at some point in time. We still prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.

Thank you.