Briefly:
Intraday trade: Our Friday's neutral intraday outlook has proved accurate. The S&P 500 index continued to fluctuate within its week-long trading range. The broad stock market is likely to open much higher today following futures contract rally after an overnight gap-up opening. We can see some short-term technical overbought conditions. Therefore, intraday short position is favored. Stop-loss is at the level of 2,490, close to early August record high. Potential profit target is at 2,455 (S&P 500 index).
Our intraday outlook is now bearish, and our short-term outlook is bearish, as we expect downward correction. Our medium-term outlook remains bearish:
Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): bearish
The main U.S. stock market indexes were mixed between -0.6% and +0.1% on Friday, extending their short-term fluctuations, as investors reacted to economic data announcements, news concerning hurricane 'Irma', among others. The S&P 500 index continues to trade around 1% below the August 8 all-time high of 2,490.87. The Dow Jones Industrial Average extended its fluctuations along the level of 21,800, and the technology Nasdaq Composite index lost 0.6%, as it fell below the level of 6,400. The nearest important level of resistance of the S&P 500 index remains at around 2,470-2,475, marked by last Tuesday's daily gap down of 2,471.97-2,473.85. The next resistance level is at 2,480-2,490, marked by recent local high and the above-mentioned August record high. On the other hand, support level is at around 2,445, marked by last Tuesday's daily low. The next level of support is at around 2.430-2,435, marked by the daily gap up of 2,430.58-2,433.67 and previous local low. The broad stock market continues to trade within an over-month-long consolidation following November-July uptrend. Will it continue higher? Or is this some medium-term topping pattern before downward reversal?
Very Positive Expectations
Expectations before the opening of today's trading session are very positive, with index futures currently up between 0.6% and 0.8% vs. their Friday's closing prices. The European stock market indexes have gained 0.5-1.2% so far. There will be no new important economic data announcements today. The S&P 500 futures contract trades within an intraday uptrend, following much higher opening of the trading session. The nearest important level of support is at around 2,465-2,470, marked by today's daily gap up, among others. The next support level remains at 2,455-2,460, marked by short-term local lows. On the other hand, resistance level is at 2,480-2,490, marked by some local highs and the early August all-time high. The market broke above its short-term consolidation this morning. Will it continue its uptrend? There have been no confirmed negative signals so far. However, we can see some short-term technical overbought conditions:
Nasdaq Relatively Stronger
The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday uptrend. It retraces its Friday's move down. The nearest important level of resistance is at around 5,980, marked by recent local high. The next level of resistance is at 6,000-6,020, marked by record high, among others. Will the Nasdaq resume its uptrend and break above 6,000 mark again?
Concluding, the S&P 500 index extended its short-term consolidation on Friday, as it lost 0.2%. The broad stock market will likely break above its recent trading range today following an overnight futures contract rally. Will the uptrend continue towards the level of 2,500? There have been no confirmed short-term negative signals so far. However, we still can see some medium-term overbought conditions along with negative technical divergences.
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Thank you.
Paul Rejczak
Stock Trading Strategist
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