Briefly: In our opinion, no speculative positions are justified.
Our intraday outlook is neutral, and our short-term outlook is neutral. Our medium-term outlook remains bearish, as the S&P 500 index extends its lower highs, lower lows sequence:
Intraday outlook (next 24 hours): Neutral
Short-term outlook (next 1-2 weeks): Neutral
Medium-term outlook (next 1-3 months): Bearish
Long-term outlook (next year): Neutral
The U.S. stock market indexes lost 3.4-4.1% on Friday, as investors reacted to the British European Referendum. The S&P 500 index bounced off resistance level at around 2,100 again, then it broke below the level of 2,050.
The nearest important level of resistance is at 2,050-2,070, marked by previous local lows, and the next resistance level is at 2,100. On the other hand, support level is at around 2,025, marked by last month's local low, among others. The next support level is at 2,000 mark. Last year's highs along the level of 2,100 continue to act as medium-term resistance level.
Will the market break above these medium-term highs and continue its seven-year long bull market? Or will it reverse its over three-month long uptrend off medium-term support level at around 1,800?
Expectations before the opening of today's trading session are negative, with index futures currently down 0.8-1.0%. The European stock market indexes have lost 1.6-2.0% so far.
The S&P 500 futures contract trades within an intraday downtrend, as it retraces its Friday's bounce off support level at around 2,000. The nearest important level of resistance is at 2,030, and the next resistance level remains at 2,050-2,060, marked by recent local high, as we can see on the 15-minute chart:
The technology Nasdaq 100 futures contract follows a similar path, as it trades lower this morning, retracing its Friday's bounce. There have been no confirmed positive signals so far. The nearest important support level is at 4,200, and resistance level is at around 4,260-4,300, as the 15-minute chart shows:
Concluding, the broad stock market sold off sharply on Friday, as investors' sentiment worsened considerably following the "Brexit" announcement. We decided to close our speculative short position (opened on June 1 at 2,093.94 on the S&P 500 index) at the opening of Friday's trading session - the average opening price of the S&P 500 index was at 2,060.
Overall, we gained around 34 index points on that trade. Currently, we 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.