The U.S. stock market indexes were mixed between 0.0% and +0.4% on Friday, as investors took some short-term profits off the table following the recent advance. The S&P 500 index traded along the level of 2,800. It reached the highest since the early February. It currently trades 2.5% below the January's 26th record high of 2,872.87. The Dow Jones Industrial Average gained 0.4% and the technology Nasdaq Composite was unchanged on Friday.
The nearest important level of support of the S&P 500 index remains at around 2,780-2,785, marked by the recent local lows. The next support level is at 2,765-2,770, marked by last Wednesday's local low along with last Monday's daily gap up of 2,764.41-2,768.51. On the other hand, the resistance level remains at around 2,800, marked by the previous local highs from February, March and June. The level of resistance is also at 2,840, marked by January the 30th daily gap down.
The broad stock market broke above its recent trading range a week ago. Is this a new uptrend or just more medium-term fluctuations following January-February sell-off? If the S&P 500 index breaks above 2,800 mark, we could see more buying pressure. Perhaps we could see a move to new record high. However, there are still two possible medium-term scenarios - bearish that will lead us below the February low following trend line breakdown, and the bullish one in a form of medium-term double top pattern or a breakout towards 3,000 mark. The S&P 500 index is closer to breaking higher now:
Still Bullish?
Expectations before the opening of today's trading session are virtually flat, because the index futures contracts trade 0.1% higher vs. their Friday's closing prices. The main European stock market indexes have been mixed so far. Investors will now wait for some economic data announcements today: Retail Sales, Empire State Manufacturing at 8:30 a.m., Business Inventories at 10:00 a.m. Investors will also wait for the quarterly corporate earnings releases. The broad stock market will likely extend its short-term uptrend this morning. However, we may see a profit-taking action at some point.
The S&P 500 futures contract trades within an intraday consolidation following an overnight advance. The nearest important level of resistance is at around 2,805-2,810, marked by the local highs. On the other hand, the level of support is now at 2,790-2,795, among others. The futures contract remains close to its short-term upward trend line, as the 15-minute chart shows:
Nasdaq Trades Along New Record High
The technology Nasdaq 100 futures contract follows a similar path, as it trades along its short-term local highs. The market reached the new record high on Friday, as it broke above the level of 7,400. Will it continue upwards? There have been no confirmed negative signals so far. The nearest important level of support is at around 6,370, and the resistance level is at 7,410-7,420. The Nasdaq futures contract trades along the level of 7,400, as we can see on the 15-minute chart:
Apple Still Weaker, Amazon at Another New Record High
Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock slightly extended its advance last week, but it still trades at the resistance level of around $190-195. On the other hand, support level remains at around $185, marked by the previous level of resistance:
Now let's take a look at Amazon.com, Inc. stock (AMZN) daily chart. It reached the new record high on Friday at the level of $1,815.30. The nearest important level of support is now at around $1,800, marked by the previous resistance level. We still can see negative medium-term technical divergences. But there have been no confirmed negative signals so far:
Dow Jones Slightly Above 25,000 Mark
The Dow Jones Industrial Average closed slightly above the level of 25,000 on Friday. The market extended its short-term uptrend, but will it continue higher despite some short-term overbought conditions? There have been no confirmed negative signals so far. The 200-day moving average acted as a support level recently, as we can see on the daily chart:
The S&P 500 index broke slightly above the level of 2,800 on Friday, as it got the highest since the early February. But will the broad stock market continue towards its late January record high? It is just 2.5% below that level. Investors will now wait for the quarterly corporate earnings releases.
Concluding, the broad stock market will likely open virtually flat today. We may see more short-term uncertainty, as the S&P 500 index trades along its recent months' highs.
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Paul Rejczak
Stock Trading Strategist
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