Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook remains neutral, following S&P 500 index breakout above last year's all-time high:
Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): neutral
The main U.S. stock market indexes were mixed between -0.1% and +0.2% on Friday, following volatile Thursday's trading session, as investors took short-term profits off the table. The S&P 500 index has reached new all-time high at the level of 2,484.04 on Thursday, before reversing lower. It fluctuated on Friday, as it remained around 0.5% below its new record high. The Dow Jones Industrial Average reached new record high at the level of 21,841.2 on Friday, as it was still relatively stronger than the broad stock market. The technology Nasdaq Composite lost 0.1%, as it fluctuated following last Thursday's rally. The nearest important support level of the S&P 500 index is now at around 2,460-2,465, marked by July 19 daily gap up of 2,460.92-2,463.85. The next level of support is at 2,450-2,455, marked by June 19 local high. The support level is also at 2,430-2,435, marked by July 12 daily gap up of 2,429.30-2,435.75. On the other hand, level of resistance is at 2,480-2,485, marked by new all-time high. The next resistance level is at 2,500 mark. There have been no confirmed negative signals so far. However, we can see overbought conditions and negative technical divergences. The S&P 500 index broke above its over month-long consolidation, as we can see on the daily chart:
Close To Record High
Expectations before the opening of today's trading session are positive, with index futures currently between +0.1% and +0.2% vs. their Friday's closing prices. The European stock market indexes have been mixed so far. Investors will now wait for some economic data announcements: Chicago PMI number at 9:45 a.m., Pending Home Sales at 10:00 a.m. The market expects that Chicago PMI was at 60.8 in July. Investors will also wait for more quarterly corporate earnings releases. The S&P 500 futures contract trades within an intraday consolidation, following an overnight move up. The market trades within an over-week-long consolidation along new record high close to the level of 2,480. The nearest important resistance level is at around 2,480-2,500. On the other hand, support level is at 2,450-2,460, marked by some short-term local lows. The next support level remains at 2,440, among others. Will the market extend its uptrend? Or is this some topping pattern before downward reversal?
Nasdaq Bounces
The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation after overnight move up. However, it remains more than 1% below Thursday's new record high. The market retraced some of its recent rally on Thursday, as it bounced off 6,000 mark. The nearest important level of resistance is at around 5,950-6,000. On the other hand, support level is at 5,850-5,870, marked by short-term local lows, as the 15-minute chart shows:
Concluding, the S&P 500 index continued to trade close to its new record high on Friday, as investors' sentiment remained bullish. It fluctuated within a relatively narrow trading range following Thursday's volatile trading session. Will uptrend accelerate towards 2,500 mark? Or is this some topping pattern before downward reversal? There have been no confirmed negative signals so far. However, we still can see negative technical divergences, along with medium-term overbought conditions.
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Paul Rejczak
Stock Trading Strategist
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