Briefly:

Intraday trade: Our Tuesday's intraday trading outlook was neutral. It proved wrong because the S&P 500 index gained 0.7%, following higher opening of the trading session. The market broke above its short-term consolidation yesterday. We still can see negative technical divergences along with medium-term overbought conditions. However, there have been no confirmed negative signals so far. Therefore, we prefer to be out of the market today, avoiding low risk/reward ratio trades.

Medium-term trade: In our opinion, no medium-term positions are justified.

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

Intraday outlook (next 24 hours): neutral
Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): neutral

The U.S. stock market indexes gained 0.7-1.1% on Tuesday, as they resumed their uptrend following last week's fluctuations. The S&P 500 index has reached new record high at the level of 2,601.19, around 4 points above its November 7 high. The Dow Jones Industrial Average has also reached new all-time high at the level of 23,617.80. The technology Nasdaq Composite was relatively stronger than the broad stock market, as it gained 1.1% yesterday. It has reached new record high of 6,862.66. The nearest important level of resistance of the S&P 500 index is at 2,600 mark. On the other hand, support level is at around 2,590, marked by yesterday's daily gap up of 2,584.64-2,589.17. The next support level is at 2,570-2,575, marked by short-term local lows. The level of support is also at 2,555-2,560. The S&P 500 index broke slightly above its month-long fluctuations. But will it continue higher? Or is this some topping pattern before medium-term downward correction? There have been no confirmed negative signals so far. However, we still can see medium-term technical overbought conditions along with negative technical divergences:

Flat Expectations

Expectations before the opening of today's trading session are virtually flat, with index futures currently between 0.0% and +0.1% vs. their yesterday's closing prices. The European stock market indexes have been mixed so far. Investors will wait for some economic data announcements today: Durable Goods Orders, Initial Claims at 8:30 a.m., Michigan Sentiment number at 10:00 a.m., Crude Oil Inventories at 10:30 a.m., FOMC Minutes release at 2:00 p.m. The market expects that Durable Goods Orders grew 0.4% in October and the Initial Claims were at 241,000 last week. The S&P 500 futures contract trades within an intraday consolidation, following yesterday's rally. The nearest important level of support is at around 2,590-2,595, marked by previous level of resistance. On the other hand, resistance level is at 2,600, marked by record high. The futures contract trades slightly below 2,600 mark, as we can see on the 15-minute chart:

Nasdaq At New Record High

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation. The market fluctuates after yesterday's intraday advance.  The nearest important level of resistance is at 6,380-6,400, marked by new record high. On the other hand, support level is at 6,340-6,360, marked by previous resistance level. The Nasdaq 100 futures contract trades along new record high, as the 15-minute chart shows:

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The price reached new record high on November 8, as it extended its uptrend following better-than-expected quarterly earnings release. Then it remained within a short-term correction. The price bounced off support level at around $170 and retraced most of its downward correction yesterday. However, it still trades below its all-time high. Will it continue higher?

The Dow Jones Industrial Average daily chart (chart courtesy of http://stockcharts.com) shows that blue-chip index retraced its early November downward correction and reached new record high slightly above its previous high. We can see some expanding triangle structure. Is this a topping pattern? We still can see negative technical divergences. The most common divergences are between asset’s price and some indicator based on it (for instance the index and RSI based on the index). In this case, the divergence occurs when price forms a higher high and the indicator forms a lower high. It shows us that even though price reaches new highs, the fuel for the uptrend starts running low:

Concluding, the S&P 500 index gained 0.7% on Tuesday, as it reached new record high following global stock markets' move up, economic data releases. The broad stock market trades slightly above its month-long consolidation. Is this a medium-term topping pattern or just another flat correction of a bull market? We still can see medium-term overbought conditions along with negative technical divergences. However, there have been no confirmed negative signals so far.

Currently, we prefer to be out of the market, avoiding low risk/reward ratio medium-term trades. We will let you know when we think it is safe to get back in the market.

To summarize: no medium-term positions are justified from the risk/reward perspective at this moment.

Intraday trade:

No intraday position is justified from the risk/reward perspective today.

Medium-term trade:

No medium-term position is justified from the risk/reward perspective at this moment.

There will be no Stock Trading Alert on Friday, November 24. We apologize for inconvenience.

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts