Briefly:

Intraday trade: The S&P 500 gained 0.7% on Monday, after opening virtually flat. The market will probably open higher today. Then we may see some short-term consolidation and a flat correction within a short-term uptrend..

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 gained 0.7-1.2% on Monday, extending their short-term uptrend as investors' sentiment remained bullish following the recent quarterly corporate earnings, economic data releases. The S&P 500 index broke above its short-term consolidation on Wednesday and it continued higher in the late last week. The market is now slightly above the 61.8% Fibonacci retracement of its October-December downward correction of 20.2% (2,713.88). It has gained 380 points from the late December medium-term low, but it is still around 220 points below the September 21st record high of 2,940.91. The Dow Jones Industrial Average gained 0.7% and the Nasdaq Composite gained 1.2% on Monday.

The nearest important resistance level of the S&P 500 index is now at 2,750-2,760, marked by some previous local highs. The resistance level is also at 2,800, marked by the early December local high. On the other hand, the support level is at 2,700-2,710, marked by the previous resistance level. The support level is also at 2,650.

The broad stock market broke below its two-month-long trading range in the mid-December, as the S&P 500 index fell below the level of 2,600. Then the market accelerated lower and it broke below the 2,400 mark. Since then, it has retraced slightly more than 61.8% of the whole decline off the September high. The index gets closer to its October-November local highs, as we can see on the daily chart:

Positive Expectations but Profit-Taking Action Possible

The index futures contracts trade 0.2-0.4% above their yesterday's closing prices. So expectations before the opening of today's trading session are positive. The European stock market indexes have gained 1.0-1.4% so far. Investors will wait for the ISM Non-Manufacturing PMI number release at 10:00 a.m. They will also wait for more quarterly corporate earnings releases. The broad stock market will likely extend its short-term uptrend at the opening of today's trading session. Then we may see some profit-taking action. We still can see short-term technical overbought conditions.

The S&P 500 futures contract trades within an intraday uptrend, as it breaks slightly above the yesterday's local high of around 2,725. The nearest important resistance level is now at around 2,725-2,730. On the other hand, the support level is at 2,715-2,720, among others. The futures contract extends its short-term uptrend this morning, as the 15-minute chart shows:

Nasdaq Closer to 7,000 Mark

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday uptrend. However, it remains below yesterday's local high. The market gained over 1,150 points from December the 26th local low of around 5,820 in the recent weeks. But the nearest important resistance level is still at 6,950-7,000. The support level is at 6,900, marked by the recent resistance level. The Nasdaq futures contract remains above its short-term upward trend line, as we can see on the 15-minute chart:

Apple Continues Higher, Amazon Lags

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). Apple released its quarterly earnings on Tuesday after the trading session's close. Then the stock broke above its recent trading range and the resistance level of $155-160. It retraced some more of its November-December sell-off. There have been no confirmed negative signals so far:

Now let's take a look at the daily chart of Amazon.com, Inc. (AMZN). The market broke above one of its three-month-long downward trend lines recently. Since then it has been going sideways. There is a resistance level at around $1,700-1,750. On Friday it bounced off that resistance level following Thursday's quarterly earnings release:

Dow Jones Also Higher

The Dow Jones Industrial Average extended its short-term uptrend yesterday after breaking above its medium-term downward trend line. Will the blue-chip stocks' gauge continue higher and reach its record high again? Or reverse lower in the near term? There have been no confirmed negative signals so far:

The S&P 500 index broke above its short-term consolidation on Wednesday, as investors reacted to the Fed's Rate Decision release. Is this a new medium-term uptrend or still just upward correction before another medium-term leg lower? The market trades slightly above the 61.8% Fibonacci retracement of the whole medium-term decline. There have been no confirmed negative signals so far. But we can see some short-term technical overbought conditions.

Concluding, the S&P 500 index will likely open higher today. We may see some profit-taking action in the near term. However, there have been no confirmed negative signals so far.

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