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

Intraday outlook: The broad stock market will likely open higher today. We may see some more short-term volatility following this month's rally.

The U.S. stock market indexes lost 0.7-1.5% on Tuesday, retracing their recent advance, as investors took more profits off the table following Friday's intraday decline off the broad stock market's gauge new record high. The S&P 500 index reached the record high of 2,964.15 on Friday, but then it came back below the 2,950 mark again. The index gained more than 230 points from its early June local low of around 2,729. The Dow Jones Industrial Average lost 0.7% and the Nasdaq Composite lost 1.5% on Tuesday.

The nearest important resistance level of the S&P 500 index is now at 2,945-2,950, marked by the recent short-term local lows. On the other hand, the support level is at 2,895-2,905, marked by June the 18th daily gap up of 2,897.27-2,905.44.

The broad stock market broke above the last year's high in the early May. But then the S&P 500 index retraced all of the April's advance. It got back higher following breaking above the month-long downward trend line. Then it reached the new record high on Friday, but we can see some selling pressure along the previous medium-term local highs:

Positive Expectations - Short-Term Consolidation?

The index futures contracts trade 0.4-0.6% above their Tuesday's closing prices, so the expectations before the opening of today's trading session are positive. The European stock market indexes have gained 0.1-0.4% so far. Investors will wait for some economic data announcements: Durable Goods Orders, Goods Trade Balance, Wholesale Inventories at 8:30 a.m., Crude Oil Inventories at 10:30 a.m.

The broad stock market will likely retrace some of its yesterday's sell-off following upbeat trade war developments this morning. However, we could see more short-term fluctuations after this month's rally.

The S&P 500 futures contract trades within an intraday uptrend, as it retraces some of some of yesterday's decline. The nearest important resistance level is now at 2,940-2,950. On the other hand, the support level is at 2,915-2,920. The futures contract remains below its recent topping pattern this morning, as the 15-minute chart shows:

Nasdaq Also Higher This Morning

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday uptrend. The nearest important resistance level is at 7,700-7,750. On the other hand, the support level is at 7,600-7,650. The Nasdaq futures contract is below the short-term downward trend line, as we can see on the 15-minute chart:

Big Cap Tech Stocks Selling Off - Downward Reversal?

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock bounced off the resistance level of $200 yesterday. However, the market remains within a short-term consolidation following the early June rally:

Now let's take a look at the daily chart of Microsoft Corp. (MSFT). The stock reached the new record high of $138.40 on Monday, following breaking above the short-term consolidation last week. But yesterday's trading session was bearish, as the price fell to the previous short-term consolidation. For now, it looks like a downward correction:

Dow Jones Closer to 26,500 Again

The Dow Jones Industrial Average has been relatively weaker than the broad stock market since February. The resistance level remained at around 26,800-27,000, marked by the last year's topping pattern and the record high of 26,951.8. On Friday the index reached the new medium-term high, following breaking above its late April consolidation. However, yesterday it retraced the recent advance:

The S&P 500 index reached the new record high on Friday, before reversing its upward course and closing slightly lower. So was it a downward reversal or just quick profit-taking action before another leg higher? Yesterday's trading session was quite bearish, but today we can see positive expectations. There may be some more volatility following the recent advances.

Concluding, the S&P 500 index will likely open higher today. The market may extend its consolidation following the early June rally.

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