Briefly:

Intraday trade: The S&P 500 index gained 0.3% on Thursday, after opening 0.2% higher. The broad stock market will probably open lower today. We may see more short-term uncertainty, as the index continues to trade along 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 gained between 0.2% and 0.7% on Thursday, retracing some of their Wednesday's decline, as investors' sentiment slightly improved despite Wednesday's interest rate hike decision. The S&P 500 index has reached the new record high of 2,940.91 a week ago on Friday. It currently trades 0.9% below that high. The Dow Jones Industrial Average gained 0.2% and the technology Nasdaq Composite gained 0.7% yesterday.

The nearest important level of support of the S&P 500 index remains at 2,900. The market fell below its last Thursday's daily gap up of 2,912.36-2,919.73 on Wednesday. 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 remains at around 2,920-2,930, marked by Monday'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 last week, 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 is at its three-month-long upward trend line following Wednesday's intraday reversal, as we can see on the daily chart:

Slightly Negative Expectations

The index futures contracts are trading 0.2% below their yesterday's closing prices right now. So expectations before the opening fo today's trading session are negative. The main European stock market indexes have lost 0.5-1.3% so far. Investors will wait for some economic data announcements today: Personal Income, Personal Spending at 8:30 a.m., Chicago PMI at 9:45 a.m., Michigan Sentiment number at 10:00 a.m. The broad stock market will likely extend its short-term fluctuations following its Wednesday's intraday downward reversal. We may see some more uncertainty along the level of 2,900. However, there have been no confirmed negative medium-term signals so far.

The S&P 500 futures contract trades within an intraday downtrend, as it retraces most of its yesterday's rebound. The nearest important level of resistance is at around 2,925-2,930, marked by the local high. The next resistance level is at 2,930-2,935. On the other hand, the support level is at 2,900-2,905, among others. The futures contract extends its short-term consolidation, as the 15-minute chart shows:

Nasdaq Still Relatively Stronger

The technology Nasdaq 100 futures contract follows a similar path, as it retraces some of its yesterday's intraday advance. The tech stocks' gauge is still relatively stronger than the broad stock market, because it continues to trade above the recent local lows. The nearest important level of resistance is at around 7,650-7,700, marked by the topping pattern along the record high. On the other hand, the support level is now at 7,550-7,600, among others. The Nasdaq futures contract remains relatively close to its short-term local high, as we can see on the 15-minute chart:

Apple, Amazon - New Uptrend or Just Fluctuations?

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, the support level is at $215:

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 but it bounced off its medium-term upward trend line, and now it is above the price of $2,000 again:

Dow Jones at the Trend Line

The Dow Jones Industrial Average reached the new all-time high at the level of 26,769.16 last week. Since then it was retracing its recent advance. It broke below the support of around 26,500 on Wednesday, but it continued to trade above the upward trend line:

The S&P 500 index retraced some of its last week's record-breaking advance recently, as investors reacted to the Fed's interest rate hike. Is this a new downtrend or still just some relatively flat correction within an uptrend? We will likely see some more short-term consolidation along the level of 2,900.

Concluding, the S&P 500 index will probably open slightly lower today. Then we may see more fluctuations along the level of 2,900. It still looks like a correction within an uptrend. There have been no confirmed medium-term negative signals so far.

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
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