Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): No positions are currently justified from the risk/reward point of view.

The S&P 500 index keeps marching higher despite short-term overbought conditions. Is this an euphoria-run that will put an end to the medium-term uptrend?

The S&P 500 index gained 0.42% on Thursday, Nov. 4, as it reached yet another new record high of 4,683.00. The rally is still not broad-based and it’s driven by a handful of tech stocks like MSFT, NVDA, TSLA. The market seems overbought in the short-term and most likely it’s still trading within a topping pattern.

The nearest important support level is now at 4,650 and the next support level is at 4,600. On the other hand, a potential resistance level is now at 4,700. The S&P 500 trades above a steep short-term upward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Nasdaq Is Also at the New Record

Let’s take a look at the Nasdaq 100 chart. The technology index broke above the 16,000 level and it is trading at the new record high. The market accelerated parabolically above its short-term upward trend line, as we can see on the daily chart:

Apple Is Volatile and Microsoft Is Still Rallying

Let’s take a look at the two biggest stocks in the S&P 500 index, AAPL and MSFT. Apple continues to trade well below the record highs and the Microsoft keeps reaching new record highs. So the tech “megacaps” are mixed, as we can see on their daily charts:

Short Position Was Closed at the Stop-Loss Level

Let’s take a look at the hourly chart of the S&P 500 futures contract. Recently the market broke above the resistance level of around 4,600. Since the previous Friday, the market has been trading above a short-term upward trend line. But this week it accelerated the advance.

Our short position was closed at the stop-loss level of 4,680. In our opinion no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com):

Conclusion

The broad stock market keeps reaching new record highs. It still looks like a topping pattern and we may see a consolidation or a downward correction at some point. There may be a profit-taking action following quarterly earnings releases. Today the main indices are expected to open 0.3-0.4% higher following better than expected monthly jobs data release.

Here’s the breakdown:

• The S&P 500 extended its uptrend on Thursday, and today it is expected to open 0.3% higher after the Nonfarm Payrolls number release.
• Our speculative short position was closed at the stop-loss level.

As always, we’ll keep you, our subscribers, well-informed.

Trading position (short-term, our opinion; levels for S&P 500 continuous futures contract): No positions are currently justified from the risk/reward point of view.

Thank you.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care