The U.S. stock market indexes were mixed between -0.3% and +0.3% on Friday, as investors hesitated following the recent advances. So volatility was relatively small despite the monthly jobs data release. The S&P 500 index broke above its short-term consolidation on Wednesday and it continued slightly higher in the late last week. The market is now at the 61.8% Fibonacci retracement of its October-December downward correction of 20.2% (2,713.88). It has gained 370 points from the late December medium-term low, but it is still around 235 points below the September 21st record high of 2,940.91. The Dow Jones Industrial Average gained 0.3% and the Nasdaq Composite lost 0.3% on Friday.
The nearest important resistance level of the S&P 500 index is at 2,710-2,720, marked by the mentioned 61.8% Fibonacci retracement and Friday's daily high. The resistance level is also at 2,750-2,760. On the other hand, the support level is at 2,650, marked by the recent fluctuations. The support level is also at 2,615-2,625, marked by the short-term local lows.
The broad stock market broke below its two-month-long trading range in the mid-December, as the S&P 500 index fell below the level of 2,600. Then the market accelerated lower and it broke below the 2,400 mark. Since then, the market has retraced 61.8% of the whole decline off the September high. The index trades close to a possible resistance level of its previously broken upward trend line, as we can see on the daily chart:
Short-Term Consolidation
The index futures contracts trade between 0.0% and +0.1% vs. their Friday's closing prices. So expectations before the opening of today's trading session are virtually flat. The European stock market indexes have been mixed so far. Investors will wait for the Factory Orders number announcement at 10:00 a.m. They will also wait for more quarterly corporate earnings releases. The broad stock market will likely fluctuate within a short-term consolidation after the recent rally. There have been no confirmed negative signals so far. However, we can see some short-term technical overbought conditions.
The S&P 500 futures contract trades within an intraday consolidation, as it continues to fluctuate along the 2,700 level. The nearest important resistance level is at around 2,710-2,715. On the other hand, the support level is now at 2,675-2,690, among others. The futures contract extends its short-term consolidation this morning, as the 15-minute chart shows:
Nasdaq Remains Close to 6,900
The technology Nasdaq 100 futures contract follows a similar path, as it extends its short-term consolidation. The market gained over 1,100 points from December the 26th local low of around 5,820 in the recent weeks. The nearest important resistance level is now at 6,950-7,000. The support level is at 6,800-6,850, marked by the recent consolidation. The Nasdaq futures contract continues going sideways, as the 15-minute chart shows:
Apple Going Sideways, Amazon Lower After Earnings
Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). Apple released its quarterly earnings on Tuesday after the trading session's close. Then the stock broke above its recent trading range and the resistance level of $155-160. It retraced some more of its November-December sell-off. The next possible resistance level is at $170:
Now let's take a look at the daily chart of Amazon.com, Inc. (AMZN). The market broke above one of its three-month-long downward trend lines recently. Since then it has been going sideways. There is a resistance level at around $1,700-1,750. On Friday it bounced off that resistance level following Thursday's quarterly earnings release:
Dow Jones Slightly Above 25,000 Mark
The Dow Jones Industrial Average extended its short-term uptrend on Friday, but it remained close to the medium-term downward trend line. So will it continue higher and reach the record high again? Or reverse lower in the near term? There have been no confirmed negative signals so far:
Japanese Nikkei Still Close to 21,000
Let's take a look at the Japanese Nikkei 225 index. It accelerated the downtrend in late December, as it fell slightly below the level of 19,000. Since then it has been retracing the downtrend. Recently it got close to 21,000 mark. For now, it still looks like an upward correction and the Nikkei is relatively weak, as it remains below the October - November local lows:
The S&P 500 index broke above its short-term consolidation on Wednesday, as investors reacted to the Fed's Rate Decision release. Is this a new medium-term uptrend or still just upward correction before another medium-term leg lower? The market trades at the 61.8% Fibonacci retracement of the whole medium-term decline. There have been no confirmed negative signals so far. But we can see some short-term technical overbought conditions.
Concluding, the S&P 500 index will likely open virtually flat. We may see some profit-taking action. However, there have been no confirmed negative signals so far.
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Thank you.
Paul Rejczak
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care
