Briefly:
Intraday trade: The S&P 500 index was unchanged on Thursday, after opening 0.1% higher. The broad stock market will probably open higher today. We may see an attempt at breaking above the 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 were mixed between -0.2% and 0.0% on Thursday, extending their short-term consolidation, as investors continued to hesitate following the recent rally. The S&P 500 index retraced more of its October-December downward correction of 20.2% on Monday. Then it fluctuated slightly below the 2,900 level. The broad stock market's gauge is now just 1.8% below September the 21st record high of 2,940.91. The Dow Jones Industrial Average lost 0.1% and the Nasdaq Composite lost 0.2% on Thursday.
The nearest important resistance level of the S&P 500 index remains at 2,900, marked by some early October local highs. The next resistance level is at 2,920-2,940, marked by the mentioned record high, among others. On the other hand, the support level is at 2,860-2,865, marked by the recent local lows. The support level is also at 2,835-2,850, marked by the previous Monday's daily gap up of 2,836.03-2,848.63.
The broad stock market retraced all of its December sell-off and it broke above the medium-term resistance level of around 2,800-2,820, marked by the October-November local highs recently. So is it still just a correction or a new medium-term uptrend? We may see an attempt at getting back to the record high. There have been no confirmed negative medium-term signals so far. The index got closer to its last October all-time high, as we can see on the daily chart:
Very Positive Expectations
Expectations before the opening of today's trading session are positive, because the index futures contracts trade 0.5-0.7% above their yesterday's closing prices. The European stock market indexes have gained 0.4-0.6% so far. Investors will wait for the Consumer Sentiment Index release at 10:00 a.m. Stocks will likely break above its short-term consolidation today. There have been no confirmed negative signals so far. However, we could see some more uncertainty as the broad stock market's gauge gets closer to the mentioned September's record high.
The S&P 500 futures contract trades within an intraday uptrend, as it breaks above the recent local high and the 2,900 mark. The nearest important resistance level is at around 2,920. On the other hand, the support level is at 2,880-2,890, among others. The futures contract is at the new medium-term high, as the 15-minute chart shows:
Nasdaq Close to its Recent Local High
The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday uptrend. The market slightly extended its medium-term uptrend on Wednesday. It has retraced most of the late last year's sell-off. The nearest important resistance level is at around 7,650-7,700. On the other hand, the support level is at 7,600. The Nasdaq futures contract is back at the recent local high this morning, as we can see on the 15-minute chart:
Microsoft - New Record High
Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock accelerated its uptrend recently and it got close to the resistance level of $200. The market continues to trade above the medium-term upward trend line:
Now let's take a look at the daily chart of Microsoft Corp. (MSFT). The stock reached new record high yesterday as it got slightly above March the 21st local high. The market continues to trade along its three-month-long upward trend line:
Dow Jones Still Going Sideways
The Dow Jones Industrial Average broke above its February local high last week and it extended the medium-term uptrend. The next resistance level is at around 26,800-27,000, marked by the last year's topping pattern and the record high of 26,951.8. On Tuesday it retraced its recent advance. For now, it looks like a relatively flat correction:
The S&P 500 index slightly extended its short-term uptrend on Monday, as it got the highest since the early October. But on Tuesday it retraced some of the advance, after bouncing off a potential 2,900 resistance level. Since then it was going sideways. For now, it looks like a short-term flat correction before another leg up.
Concluding, the S&P 500 index will likely open higher today. We may see an attempt at breaking above the short-term consolidation. There may be some uncertainty, as stocks trade closer to their September's record high.
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
