Briefly:

Intraday trade: The S&P 500 index lost 0.4% after opening 1.3% lower. The broad stock market will likely open lower again today. Then we may see a short-term consolidation.

Trading position (short-term; our opinion): no positions are justified from the risk/reward perspective.

Our short-term outlook is neutral, and our medium-term outlook is neutral:

Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): neutral

The U.S. stock market indexes lost 0.3-0.5% on Monday, following bouncing of much lower daily lows, as investors reacted to the renewed trade war fears. The S&P 500 index retraced its recent advance, but it continued to trade above the 2,900 mark. The Dow Jones Industrial Average lost just 0.3% and the Nasdaq Composite lost 0.5% on Monday.

The nearest important resistance level of the S&P 500 index remains at around 2,950-2,955, marked by the record high. The next resistance level is at 3,000. On the other hand, the support level is at 2,915-2,920, marked by the recent resistance level. The support level is also at 2,890-2,900.

The broad stock market retraced all of its December sell-off and it broke above the last year's high recently. There have been no confirmed negative medium-term signals so far. However, the index is trading sideways and along its last year's high, as we can see on the daily chart:

Negative Expectations, Short-Term Consolidation?

Expectations before the opening of today's trading session are negative, because the index futures contracts trade 0.5-0.7% below their Monday's closing prices. The European stock market indexes have lost 0.7-0.9% so far. There will be no new important economic data announcements today. The broad stock market will likely extend its short-term consolidation following April's advance. For now, it looks like a relatively flat correction. However, if the index breaks below the mentioned support level of around 2,890-2,900, we could see more selling pressure.

The S&P 500 futures contract trades within an intraday downtrend, as it retraces its overnight advance. The nearest important level of resistance is at around 2,930-2,935. On the other hand, the support level is at 2,900-2,910. The futures contract is at the short-term upward trend line this morning, as the 15-minute chart shows:

Nasdaq Going Sideways

The technology Nasdaq 100 futures contract follows a similar path, as it retraces its overnight advance. The nearest important resistance level is at 7,800. On the other hand, the support level is at 7,700-7,750, among others. The Nasdaq futures contract continues to trade within a consolidation, as we can see on the 15-minute chart:

Big Cap Tech Stocks - More Uncertainty

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock gained almost 5% on Wednesday, following Tuesday's quarterly earnings release. The price got back above the broken medium-term upward trend line again. However, Wednesday's intraday trading action was quite bearish. And yesterday the stock got back below the upward trend line, before bouncing back and getting closer to the late last week's trading range. The resistance level remains at around $210-215:

Now let's take a look at the daily chart of Microsoft Corp. (MSFT). The stock accelerated its uptrend recently, as it reached the new record high of $131.37. Investors reacted to a better-than-expected quarterly earnings release. For now, it looks like a blow-off topping pattern. We saw some clear technical overbought conditions:

Dow Jones at Medium-Term Trend Line

The Dow Jones Industrial Average was relatively weaker than the broad stock market recently. Yesterday the blue-chip stocks' gauge bounced of its medium-term upward trend line. The resistance level is still at around 26,800-27,000, marked by the last year's topping pattern and the record high of 26,951.8. There have been no confirmed negative signals so far. However, we still can see some negative technical divergences:

The S&P 500 index has reached the new record high last week after breaking above the recent local highs. The broad stock market extended its medium-term uptrend, as investors' sentiment remained very bullish following economic data, quarterly corporate earnings releases. However, yesterday it retraced its recent advance following the renewed trade war fears. Then we saw more short-term volatility, as stocks bounced back up.

Concluding, the S&P 500 index will likely open lower again today. For now, it looks like a relatively flat correction within a medium-term rally.

Trading position (short-term; our opinion): no positions are justified from the risk/reward perspective.

Thank you.

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