Briefly:
Intraday trade: The S&P 500 index gained 0.03% on Tuesday after opening 0.1% higher. The broad stock market will probably open virtually flat today. Then we may see some more short-term uncertainty, as stocks trade along their potential resistance level of around 2,900. 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 0.03-0.15% on Tuesday, slightly extending their short-term uptrend, as investors reacted to better-than-expected Consumer Confidence number release, among other factors. The S&P 500 index has reached yet another new record high at the level of 2,903.77, before closing slightly below 2,900 mark. The Dow Jones Industrial Average gained 0.05% and the technology Nasdaq Composite gained around 0.2% yesterday.
The nearest important level of support of the S&P 500 index is at around 2,875-2,885, marked by Monday's daily gap up of 2,876.16-2,884.69. The next support level is at 2,860-2,865, marked by the previous short-term resistance level. The support level is also at 2,850. On the other hand, potential resistance level remains at around 2,900.
The broad stock market reached another new record high yesterday, as it broke slightly above the level of 2,900. We may see some more upward price action in the near term, but a downward correction may be coming. The market has retraced its late January - early February downward correction recently. So will it continue towards 3,000 mark? The index trades above its medium-term upward trend line, as we can see on the daily chart:
Short-term Profit Taking Action?
Expectations before the opening of today's trading session are virtually flat, because the index futures trade between -0.1% and +0.1% vs. their yesterday's closing prices. The main European stock market indexes have been mixed so far. Investors will wait for some economic data announcements today: Preliminary GDP number at 8:30 a.m., Pending Home Sales at 10:00 a.m., Crude Oil Inventories at 10:30 a.m. The broad stock market will probably open virtually flat today. Then we may see some short-term fluctuations following the recent rally. There have been no confirmed negative signals so far. However, we can see some technical overbought conditions.
The S&P 500 futures contract trades within an intradaty downtrend, as it retraces some of its overnight advance. The nearest important level of resistance is at around 2,905. On the other hand, support level is at 2,890-2,895, among others. The futures contract trades along the level of 2,900, as we can see on the 15-minute chart:
Nasdaq Remains Close to 7,600
The technology Nasdaq 100 futures contract follows a similar path, as it retraces some of its recent advance. The market trades closer to the level of 7,600. On the other hand, the nearest important level of support is now at around 7,550-7,570, marked by the recent fluctuations. The support level is also at the level of 7,500-7,530. The Nasdaq futures contract trades above its two-day-long upward trend line, as the 15-minute chart:
Apple, Amazon - New Record Highs
Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). It reached the new record high yesterday at the level of $220.54. There have been no confirmed negative signals so far. However, we may see a downward correction at some point. The nearest important level of support is now at $205-210, marked by the recent consolidation. The price is still at its short-term upward trend line:
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 $1,941.78 yesterday. The stock continues to trade above its month-long upward trend line. We can see some negative technical divergences. However, there have been no confirmed negative signals so far:
Dow Jones Also Higher
The Dow Jones Industrial Average reaches new local highs after breaking above its last week's high. The blue-chip stocks' gauge remains above the level of 26,000. But it continues to trade below its late January record high of 26,616.71. The nearest important level of resistance is at 26,340-26,440, marked by the late January daily gap down. The index remains above its two-month long upward trend line, as the daily chart shows:
The S&P 500 index reached the new record high above the level of 2,900 yesterday. Will uptrend continue towards 3,000 mark? There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions along with negative technical divergences.
Concluding, the S&P 500 index will likely open virtually flat today. The market accelerated its uptrend recently, and we may see a profit-taking action at some point in time.
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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