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. We may see a short-term profit taking action at some point.
The U.S. stock market indexes gained 0.2-1.1% on Friday, extending their uptrend, as investors reacted to the quarterly earnings, economic data releases. The S&P 500 index reached the new record high of 3,027.98. It gained around 300 points from its early June local low. The Dow Jones Industrial Average gained 0.1% and the Nasdaq Composite gained 1.1% on Friday.
The nearest important resistance level of the S&P 500 index is at around 3,030, marked by the new record high. On the other hand, the support level is now at 3,000-3,010, marked by the short-term local lows. The support level is also at 2,975-2,980, marked by the mid-July local lows.
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 is now at around 1% above the 3,000 level:
Flat Expectations
The index futures contracts trade 0.1% higher vs. their Friday'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. There will be no new important economic data announcements today. However, investors will wait for more quarterly corporate earnings releases.
The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates along the Friday's closing price. The nearest important resistance level is at around 3,025-3,030. On the other hand, the support level is at 3,015-3,020, among others. The futures contract trades above its short-term upward trend line, as we can see on the 15-minute chart:
Nasdaq 100 Above 8,000 Mark
The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation. It broke above the 8,000 resistance level recently. The resistance level is now at around 8,050, marked by the record high. On the other hand, the support level is at 7,980-8,000. The Nasdaq futures contract remains close to the record high, as the 15-minute chart shows:
Microsoft Reaches Another New Record High, Apple Lags
Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock trades at the resistance level of $210-215. It was the highest since the early May on Friday. But will it extend the uptrend ahead of Tuesday's quarterly earnings release? There have been no confirmed negative signals so far:
Now let's take a look at the daily chart of Microsoft Corp. stock (MSFT). The stock reached the new record high of $141.68 on Friday following the recent quarterly earnings release. Will the uptrend continue? There have been no confirmed negative signals so far. However, we can see some clear negative technical divergences:
Dow Jones Relatively Weaker Again
The Dow Jones Industrial Average continues to trade within a short-term consolidation. It remains close to the record high of 27,398.68. However, the blue-chip stocks' gauge is relatively weaker than the broad stock market. For now, it looks like a flat correction within an uptrend:
The S&P 500 index reached the new record high on Friday as it traded 1% above the 3,000 mark. Will the uptrend continue? We could see a profit-taking action at some point. Investors will now wait for the Wednesday's Fed Rate Decision and Friday's monthly jobs data release.
Concluding, the S&P 500 index will likely open virtually flat today. The market will likely trade along the new record high ahead of the important economic data releases this week.
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
