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Futures indicate very weak opening tomorrow morning

If you are already frustrated by two weak months we just passed (December 2014 and January 2015) it looks like we are going to see February 2015 as bad as January was.

Futures are already trading at a steep discount indicating S&P 500 down -1.45% -29.35. If this drop continues until tomorrow morning, we may expect the markets to open down on Monday.

 
SPX Futures
 

If we drop, then such drop can have a serious consequences for the market. And the chance that we drop below is very high. We had a support at 2000 level which we broke on Friday and closed below slightly above the main support at 1992.

Monday will be crucial. If we break 1992 level and close below it, we have a full arsenal of problems in front of us.

We have one major support at 1975 level then. We will have 200 day MA and previous (December) low at that level which may stop the fall. After that our next stop will be at 1945 and then a free fall all the way down to 1820. If we see a violent trading this coming week we may even hit our extreme level at 1900 this week before we go lower to 1820 support.

Quite a dim outlook for the market, right?

 
SPX weekly review
 

Of course the market can reverse and hold the support at 1992. If that happens, in that case the market may go up to 2034 level or even go higher and close the next week at 2082 level. Everything is possible at Wall Street. However, I do not expect this much considering the weakness of the market.

Although from the long term perspective, this market is still bullish and undergoing a consolidation which may shoot the market to new all-time highs, the very short term outlook is bearish. Since I trade weekly options, my next week outlook is bearish.

On the other hand, as a dividend investor this can be a great opportunity to get ready for buying cheap dividend stocks cheaper (even though I expect them to hold better than growth stocks).

Good luck on your trading and investing in the next week!
 





One response to “Futures indicate very weak opening tomorrow morning”

  1. Dennis says:

    Great advice about tomorrow and this entire week. I watch the DJIA more than the SP500 so I’m looking at support above 17,000. If we break that it could get really ugly, but this area has held in the recent past. I guess time will tell. Stay agile.

    Respectfully,

    Dennis McCain

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