Our intraday outlook is now 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 U.S. stock market indexes were mixed between -1.8% and +0.4% on Friday, as investors were selling technology stocks and buying financial sector stocks, among others. All the main stock market indexes have reached new all-time highs on Friday. The S&P 500 index lost 0.1% following relatively volatile trading session. The broad stock market index trades just 0.6% below its new record high of 2,446.20. It has broken above week-long consolidation along 2,400 mark recently. Stocks have rebounded strongly after their mid-May quick two-session sell-off and continued their over eight-year-long bull market off 2009 lows. The Dow Jones Industrial Average has reached new record high of 21,305.35 on Friday. It failed to remain above 21,300 mark, but gained 0.4%. The technology Nasdaq Composite index lost 1.8%, closing just above 6,200 mark, as investors were broadly selling out of some important technology stocks like Apple, Amazon, Google, Facebook etc. It has managed to reach yet another new all-time high at the level of 6,341.70 before moving much lower. The nearest important resistance level of the S&P 500 index remains at around 2,440-2,450, marked by new record high, among others. On the other hand, support level is at around 2,415-2,420, marked by previous resistance level. The next support level is at 2,400-2,410, marked by the May 25 daily gap up of 2,405.58-2,408.01, among others. The support level is also at 2,390-2,395, marked by some short-term local lows. Will the uptrend continue towards 2,500 mark? There have been no confirmed negative signals so far. However, we can see some overbought conditions and negative technical divergences. The S&P 500 index is currently trading close to its November-April upward trend line, as we can see on the daily chart:
Negative Expectations Following Friday's Decline, But Will Downtrend Continue?
Expectations before the opening of today's trading session are negative, with index futures currently down 0.2-0.7% vs. their Friday's closing prices. Investors continue to sell technology sector stocks, as the Nasdaq 100 futures trades 0.7% lower. The European stock market indexes have lost 0.1-1.0% so far. There will be no new important economic data announcements today. The S&P 500 futures contract trades within an intraday downtrend, as it retraces some of its Friday's late session rebound, following an overnight consolidation. The nearest important resistance level is at around 2,435-2,445, marked by Friday's new all-time high, among others. On the other hand, support level is at 2,415-2,420, marked by recent local lows. The next support level remains at 2,400-2,410. The market trades within a short-term consolidation, as it is above the early March local high. There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions, along with negative technical divergences:
Technology Stocks Fluctuate After Their Friday's Sell-Off - Bottom Or Just Flat Correction?
The technology Nasdaq 100 futures contract is currently trading along the level of 5,700, following more than 200-points sell-off on Friday. We can see some increased volatility. The nearest important level of support is at around 5,660-5,680, marked by short-term local lows. On the other hand, resistance level is at 5,760-5,780, marked by previous level of support. There have been no confirmed positive signals so far. But will technology stocks continue their short-term downtrend? For now, it looks like some relatively flat correction within a downtrend off Friday's high:
Concluding, the S&P 500 index continued to trade within a short-term consolidation on Friday, as it lost just 0.1% after technology stocks sell-off. Will the uptrend resume? Or is this some topping pattern before downward reversal? There have been no confirmed negative signals so far. However, we can see some negative technical divergences, along with medium-term overbought conditions.
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Paul Rejczak
Stock Trading Strategist
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