The U.S. stock market indexes lost 0.3-0.7% on Friday, as they extended their short-term consolidation along the new record highs. The S&P 500 index reached the new record high of 3,017.80 on Monday a week ago. It gained around 290 points from its early June local low of 2,728.81. The Dow Jones Industrial Average lost 0.3% and the Nasdaq Composite lost 0.7% on Friday.
The nearest important resistance level of the S&P 500 index remains at 3,000. The next resistance level is at around 3,015-3,020, marked by the record high. On the other hand, the support level is at 2,965-2,970, marked by the early July local lows.
The broad stock market broke above its short-term consolidation recently and it broke above the 3,000 mark. Is this a real bullish breakout above the last year's September-October topping pattern? The S&P 500 continues to trade along the 3,000 level:
Positive Expectations, Upward Correction or Reversal?
The index futures contracts trade 0.3-0.5% above their Friday's closing prices, so expectations before the opening of today's trading session are positive. The European stock market indexes have gained 0.2-0.4% so far. There will be no new important economic data announcements today. However, investors will wait for the quarterly corporate earnings releases.
The S&P 500 futures contract trades within an intraday uptrend, as it retraces some of the Friday's decline. The nearest important resistance level is at 2,990-3,000. On the other hand, the support level is at 2,970-2,975. The futures contract remains close to its Thursday's local lows, as we can see on the 15-minute chart:
Nasdaq 100 Also Higher
The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday uptrend. It bounced off the 8,000 resistance level again on Friday. The support level is now at 7,800-7,850. The Nasdaq futures contract retraces some of the Friday's decline, as the 15-minute chart shows:
Microsoft Declining from New Record - Reversal?
Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock continues to trade above the $200 level. We still can see a short-term consolidation, as the market fluctuates below the early May local highs. The resistance level remains at $210-215, and the support level is at $195-200:
Now let's take a look at the daily chart of Microsoft Corp. stock (MSFT). The stock reached the new record high on Friday, following Thursday's quarterly earnings release. However, it retraced most of the advance on the same day and it got back to the month-long consolidation along the price of $135:
Dow Jones - Topping Pattern or Just Consolidation?
The Dow Jones Industrial Average reached the new record high of 27,398.68 on Tuesday. Then it retraced some of the recent rally. For now, it looks like a downward correction. However, we still can see technical overbought conditions:
Nikkei Consolidating
Let's take a look at the Japanese Nikkei 225 index. It broke below the over month-long upward trend line early last week and then it bounced off the 21,000 mark again. The market extends its half-year-long consolidation:
The S&P 500 index reached the new record high on Monday a week ago, as investors' sentiment remained bullish ahead of the quarterly corporate earnings releases, among other factors. But then it fluctuated, as investors took profits off the table. The index got back below the 3,000 mark again on Friday. For now, it looks like a consolidation. We could see some more sideways trading action, as investors react to the quarterly corporate earnings releases.
Concluding, the S&P 500 index will likely open higher today. We could see more short-term fluctuations along the 3,000 mark.
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Paul RejczakStock Trading StrategistSunshine Profits - Effective Investments through Diligence and Care
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