Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective (S&P 500 index).
Intraday outlook: The broad stock market will likely open virtually flat today. Then we may see some more consolidation following the recent rally.
The U.S. stock market indexes lost 0.1-0.4% on Tuesday, as investors took short-term profits off the table following the recent record-breaking advance. The S&P 500 index reached the new record high of 3,017.80 on Monday. It gained around 290 points from its early June local low of 2,728.81. Yesterday it got closer to the 3,000 mark again. The Dow Jones Industrial Average lost 0.1% and the Nasdaq Composite lost 0.4% on Tuesday.
The nearest important resistance level of the S&P 500 index remains at around 3,015-3,020. On the other hand, the support level is at 2,995-3,000, marked by the recent resistance level. The support level is also at 2,985, marked by last week's Wednesday's daily gap up of 2.981.90-2,984.62.
The broad stock market broke above its short-term consolidation recently and it broke above the 3,000 mark. Is this a real bullish breakout above the last year's September-October topping pattern? The S&P 500 extended its half-year-long run-up:
Flat Expectations, Still Above 3,000
The index futures contracts trade 0.1% higher vs. their Tuesday's closing prices, so expectations before the opening of today's trading session are virtually flat. The European stock market indexes have been mixed so far. Investors will wait for some economic data announcements today: Housing Starts, Building Permits at 8:30 a.m., Crude Oil Inventories at 10:30 a.m., the Beige Book release at 2:00 p.m. They will also wait for the quarterly corporate earnings releases.
The S&P 500 futures contract trades within an intraday consolidation following an overnight advance. The nearest important support level is now at 3,000. On the other hand, the resistance level is at 3,015-3,020. The futures contract remains close to the previous local highs this morning, as we can see on the 15-minute chart:
Nasdaq Going Sideways
The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation. It bounced off the 8,000 mark yesterday. The support level is at 7,900-7,950. The Nasdaq futures contract broke below its short-term upward trend line, as the 15-minute chart shows:
Apple, Amazon - No Clear Short-Term Direction
Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock broke slightly above the resistance level of $200 recently. Then we saw a short-term consolidation, as the market fluctuated below the early May local highs. The resistance level remains at $210-215, and the support level is at $195-200:
Now let's take a look at the daily chart of Amazon.com, Inc. stock (AMZN). The stock broke above its early May local high last week and it got closer to the price of $2,000. Then it accelerated higher. There is another resistance level of around $2,050, marked by the last year's record high of $2,050.50. On the other hand, the support level is now at $1,970-2,000:
Dow Jones Reaches New Record, but Closes Lower
The Dow Jones Industrial Average reached the new record high of 27,398.68 yesterday. There have been no confirmed negative signals so far. However, we still can see some short-term overbought conditions:
The S&P 500 index reached the new record high on Monday, as investors' sentiment remained bullish following the recent advances. But will the uptrend continue? We may see some short-term uncertainty following the breakout above 3,000 mark.
Concluding, the S&P 500 index will likely open virtually flat today. We could see more short-term fluctuations along the record high and the 3,000 mark. Investors will wait for the coming quarterly earnings releases.
Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective (S&P 500 index).
Thank you.
Paul Rejczak
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care
