Briefly:

Intraday trade: The S&P 500 index lost 0.4% on Monday, after opening 0.2% lower. The broad stock market will probably open slightly higher today. We may see some more short-term uncertainty, as the index continues to trade above the support level of its late August high. We prefer to be out of the market, avoiding low risk/reward ratio trades.

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

Our intraday outlook is neutral. 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 were mixed between -0.7% and +0.1% on Monday, as investors took short-term profits off the table following the recent advance. The S&P 500 index has reached the new record high of 2,940.91 on Friday. It currently trades 0.7% bellow that high. The Dow Jones Industrial Average lost 0.7% and the technology Nasdaq Composite gained 0.1% yesterday.

The nearest important level of support of the S&P 500 index remains at 2,915-2,920, marked by Thursday's daily gap up of 2,912.36-2,919.73 and the late August local high. The next support level is at 2,900. The support level is also at 2,885-2,890, marked by the recent local lows. On the other hand, the nearest important level of resistance is now at around 2,925, marked by yesterday's daily gap down of 2,923.79-2,927.11. The resistance level is also at 2,940, marked by the record high.

The broad stock market reached the new record high on Friday, as the S&P 500 index extended its short-term uptrend above the level of 2,900. Will it continue higher despite some short-term technical overbought conditions? The index continues to trade above its three-month-long upward trend line, as we can see on the daily chart:

Positive Expectations

Expectations before the opening of today's trading session are slightly positive, because the index futures contracts trade 0.2-0.3% above their yesterday's closing prices. The European stock market indexes have gained 0.3-0.5% so far. Investors will wait for the Consumer Confidence number release at 10:00 a.m. The broad stock market will likely continue to fluctuate above the level of 2,900. The index remains above its late August local high. If it breaks lower, we could see more selling pressure. For now, it looks like a correction within an uptrend.

The S&P 500 futures contract trades within an intraday uptrend, as it retraces its yesterday's decline. The nearest important level of resistance is at around 2,930-2,935, marked by the previous support level. The next resistance level remains at 2,940-2,945, marked by the record high. On the other hand, support level is at 2,915-2,925, marked by the recent fluctuations. The futures contract got back to its Friday's closing price, as the 15-minute chart shows:

Nasdaq Also Higher

The technology Nasdaq 100 futures contract follows a similar path, as it retraces its recent decline. However, it remains relatively weaker than the broad stock market following almost 4% downward correction off the August 30th record high of around 7,700. The nearest important level of resistance is at around 7,600-7,650. On the other hand, support level is at 7,500-7,550, among others. The Nasdaq futures contract is close to 7,600 mark again, as we can see on the 15-minute chart:

Big Cap Tech Stocks Reversing Higher?

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). It reached the new record high at the level of $229.67 on September the 5th, before reversing lower. Then it broke below its month-long upward trend line. The resistance level remains at $225-230. On the other hand, support level is at $215. If the price breaks lower, we could see more selling pressure:

Now let's take a look at Amazon.com, Inc. stock (AMZN) daily chart. It has reached the new record high at the price of $2,050.50 in the early September. Since then it was retracing its record-breaking rally. The stock broke below the month-long upward trend line and now is trading at its medium-term upward trend line:

Dow Jones Lower

The Dow Jones Industrial Average extended its uptrend on Friday, as it reached the new all-time high at the level of 26,769.16. The nearest important level of support remains at 26,500, marked by the recent resistance level. The index accelerated the uptrend above its tree-month long upward trend line. On Monday, it was retracing some of its record-breaking rally. We still can see some short-term technical overbought conditions:

The S&P 500 index reached the new record high on Friday following the recent breakout above the late August local high of around 2,917. The broad stock market extended its over nine-year-long bull market, but will it continue much higher? Yesterday's decline will likely lead to some short-term consolidation.

Concluding, the S&P 500 index will probably open higher today. It seems that the investors' sentiment remains quite bullish following the recent record-breaking rally.

Intraday trade:

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

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

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts