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Before the Bell: Futures Are Down, Expectations Are Negative for Stocks, S&P 500

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Was yesterday's action part of a new uptrend or just a quick bounce?

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The US stock market indices gained between 1.1% and 1.8% on Wednesday, retracing some of their recent move down, as investors reacted to the FOMC minutes release, hoping for prolonged easy monetary policy. The S&P 500 Index (INDEXSP:.INX) trades higher within its March-April consolidation, after bouncing off the support at around 1,840-1,850. The bounce was not that much of a surprise; as we stated in yesterday's forecast: "...a downtrend reversal cannot be ruled out -- the market is at the support of 1,840-1,850, marked by March consolidation, among others." The resistance remains at 1,880-1,900.

There is no clear short-term trend, as we can see on the daily chart:
 

Click to enlarge
 
Expectations before the opening of today's session are negative, with index futures currently down 0.2-0.3%. The European stock market indices have been mixed so far.

Investors will now wait for the Initial Claims data announcement at 8:30 a.m.

The S&P 500 futures contract (CFD) has bounced off the support at 1,830-1,840. There is some intraday resistance at around 1,865. For now, it only looks like a correction within downtrend.

The resistance remains at 1,875-1,890, as the 15-minute chart shows:
 

Click to enlarge
 
The technology Nasdaq-100 (INDEXNASDAQ:NDX) futures contract (CFD) has followed a similar path, bouncing off the support at 3,480-3,500. The nearest important resistance is at the psychological 3,600. The market remains in a month-long downtrend, as it keeps establishing lower lows and lower highs:
 

Click to enlarge
 
Concluding, yesterday's move up looks corrective and there have been no confirmed signals of a new short-term uptrend so far.

Our intraday outlook remains neutral, as the market may retrace some of yesterday's move up, extending its month-long fluctuations, 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

For the full version of this essay and more, visit Sunshine Profits' website.

Paul Rejczak is a stock market strategist who has been known for the quality of his technical and fundamental analysis since the late 1990s. He is interested in forecasting market behavior based on both traditional and innovative methods of technical analysis. Paul has made his name by developing mechanical trading systems. He is the author of Sunshine Profits' premium service for stock traders: Stock Trading Alerts.
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