Stocks extended their downtrend yesterday, but the index closed virtually flat. So was it a short-term bottom?

The S&P 500 index lost 0.1% on Thursday, Jan. 6, as it fluctuated following the Wednesday’s sell-off of almost 2%. The market reached new local low at 4,671.26 before bouncing back closer to the 4,700 level. So it traded almost 150 points below the Tuesday’s record high of 4,818.62. The recent consolidation along the 4,800 level was a topping pattern. And the market got back to its November-December trading range.

On Dec. 3 the index fell to the local low of 4,495.12 and it was 5.24% below the previous record high. So it was a pretty mild downward correction or just a consolidation following last year’s advances.

The nearest important resistance level is now at 4,700-4,720, and the next resistance level remains at around 4,750. On the other hand, the support level is now at 4,650, marked by some previous local highs. The S&P 500 remains close to the November’s-December’s consolidation local highs, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Apple Price Broke Below the Trend Line

Apple stock broke below its two-month long upward trend line on Wednesday after reaching the new record high of $182.94 on Tuesday. So far, it looks like a downward correction and the nearest important support level is at $165-170, marked by the previous highs and lows.

Is this a medium-term topping pattern? It’s getting very hard to fundamentally justify the Apple’s current market capitalization of around $3 trillion.

Conclusion

The S&P 500 index is expected to open 0.2% lower today. So the volatility is on the light side after the mixed monthly jobs data release from this morning. We may see some more short-term fluctuations and possibly an intraday upward correction.

Here’s the breakdown:

• The S&P 500 fluctuated following its Wednesday’s sell-off.
• Jobs data release was mixed and rather neutral for the markets.
• In our opinion no positions are currently justified from the risk/reward point of view.

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Paul Rejczak,
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Sunshine Profits: Effective Investments through Diligence and Care

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The S&P 500 retraced its late last week’s declines yesterday and it went closer to the 4,800 level again. Will it reach the new record high today?

The broad stock market index gained 0.64% on Monday, Jan. 3, as it retraced most of the recent decline from last Thursday’s record high of 4,808.93. Yesterday the index fell to the local low of 4,758.17, before advancing almost 40 points. The S&P 500 index remains way above the local highs from November and December. Stocks broke above the consolidation and we had a quick Santa Claus rally. The broad stock market’s gauge continues to trade within a short-term consolidation. For now, it looks like a relatively flat correction within an uptrend.

On Dec. 3 the index fell to the local low of 4,495.12 and it was 5.24% below the previous record high. So it was a pretty mild downward correction or just a consolidation following last year’s advances.

The nearest important resistance level remains at around 4,800-4,810. On the other hand, the support level is at 4,740-4,750, marked by the previous highs. Recently the S&P 500 broke above its two-month long consolidation, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Apple’s Market Cap Tops $3 Trillion

Apple stock reached the new record high of $182.88 yesterday, as it broke slightly above the Dec. 13 high of $182.13. The stock remains above its two-month long upward trend line. There have been no confirmed negative signals so far, however, the market may be trading within a medium-term topping pattern. It’s getting very hard to fundamentally justify the Apple’s current market capitalization of around $3 trillion.

Conclusion

The S&P 500 index is expected to open 0.3% higher this morning, but we may see some short-term uncertainty and a further consolidation along the 4,800 level. There have been no confirmed negative signals so far.

Here’s the breakdown:

• The S&P 500 will likely extend its short-term consolidation along the 4,800 level.
• In our opinion no positions are currently justified from the risk/reward point of view.

Today's premium Stock Trading Alert includes details of our trading position. Interested in more exclusive updates? Join our premium Stock Trading Alerts newsletter and read all the details today.

Thank you.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care

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Available to premium subscribers only.

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