Briefly:

Intraday trade: The S&P 500 gained 0.3% on Tuesday, after opening 0.1% higher. The market will probably open higher again today. We may see some short-term uncertainty as stocks get closer to their recent local highs.

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 were mixed between -0.4% and +0.4% on Tuesday, as investors hesitated following Monday's advance. The S&P 500 index retraced more of its October-December downward correction of 20.2% a week ago, before reversing lower and getting back below the 2,800 level. The market fluctuated close to the previous medium-term local highs and then it retraced most of its February's advance. But it came back higher this week. The Dow Jones Industrial Average lost 0.4% and the Nasdaq Composite gained 0.4% yesterday.

The nearest important resistance level of the S&P 500 index is at around 2,800-2,820, marked by the medium-term local highs. On the other hand, the support level is now at 2,785, marked by the yesterday's daily gap up of 2,784.00-2,786.73. The support level is also at 2,745-2,750, marked by the Monday's daily gap up of 2,744.13-2,747.61.

The broad stock market retraced all of its December sell-off and it got close to the medium-term resistance level of around 2,800, marked by the October-November local highs recently. So is it still just a correction or a new medium-term uptrend? The market broke above the 61.8% Fibonacci retracement of the 20% decline. And we may see an attempt at getting back to the record highs. But will the index break above the mentioned previous local highs? There have been no confirmed negative signals so far. However, the index broke below the two-month-long upward trend line on Thursday:

Positive Expectations

Expectations before the opening of today's trading session are positive, because the index futures contracts trade 0.1-0.2% above their Tuesday's closing prices. The European stock market indexes have been mixed so far. Investors will wait for some economic data announcements today: Producer Price Index, Durable Goods Orders at 8:30 a.m., Construction Spending at 10:00 a.m., Crude Oil Inventories at 10:30 a.m. The broad stock market will likely continue to fluctuate following the recent rally. We may see some short-term uncertainty, as the index gets closer to the 2,800 mark again.

The S&P 500 futures contract trades within an intraday uptrend, as it retraces its yesterday's intraday decline. The nearest important resistance level is now at around 2,800-2,805. On the other hand, the support level is at 2,785, among others. The futures contact remains close to the 2,800 mark this morning, as the 15-minute chart shows:

Nasdaq Also Higher

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday uptrend. The market fell below the 7,000 mark on Friday, as investors took profits off the table following an almost 1,400-point rally from December the 26th local low of around 5,820. Then it came back above the 7,200 level and reached the new medium-term high. The nearest important resistance level is at around 7,250. On the other hand, the support level is now at 7,100-7,150. The Nasdaq futures contract is close to the recent local high, as we can see on the 15-minute chart:

Apple Higher, Amazon Going Sideways

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The market broke above its recent local highs on Monday and it got closer to the $180 level. The next resistance level is at $190-200. There have been no confirmed negative signals so far:

Now let's take a look at the daily chart of Amazon.com, Inc. (AMZN). The market retraced some of its recent declines this week. However, it continues to trade slightly below the medium-term downward trend line. There is a relatively important resistance level of around $1,700-1,750, marked by the previous local highs:

Dow Jones - Uncertainty Following Monday's Rally

The Dow Jones Industrial Average retraced some of its last week's decline on Monday, following bouncing off the support level of around 25,000-25,500. For now, it looks like an upward correction. However, if the blue-chip stocks' gauge breaks above the 26,000 level, we could see more buying pressure:

The S&P 500 index slightly extended its recent run-up a week ago, before reversing lower and getting back below the 2,800 level. Then it retraced some more of its recent advances and on Thursday it broke below the two-month-long upward trend line. But the market came back closer to the local highs early this week. For now, it looks like a consolidation within a medium-term uptrend.

Concluding, the S&P 500 index will likely open higher today. We may see an attempt at breaking above the 2,800 mark. For now, it looks like a consolidation following the two-month-long 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