Briefly:

Intraday trade: The S&P 500 index gained 0.1% on Monday, after opening virtually flat. The broad stock market will likely open virtually flat again today. We may see a short-term consolidation following the recent rally.

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 were mixed between 0.0% and +0.2% on Monday, slightly extending their uptrend, as investors' sentiment remained bullish. The S&P 500 index retraced all of its medium-term downward correction of 20.2% recently and yesterday it reached the new record high of 2,949.52. The Dow Jones Industrial Average was unchanged and the Nasdaq Composite gained 0.2% on Monday.

The nearest important resistance level of the S&P 500 index is now at around 2,950, marked by the new record high. The next resistance level is at 3,000. On the other hand, the support level is at 2,915-2,920, marked by the recent resistance level. The support level is also at 2,900.

The broad stock market retraced all of its December sell-off and it broke above its last year's high. There have been no confirmed negative medium-term signals so far. The index continues to trade within a medium-term uptrend, as we can see on the daily chart:

Mixed Expectations

Expectations before the opening of today's trading session are virtually flat, because the index futures contracts trade between -0.1% and +0.1% vs. their Monday's closing prices. The European stock market indexes have been mixed so far. Investors will wait for some economic data announcements today: Chicago PMI at 9:45 a.m., Consumer Confidence, Pending Home Sales at 10:00 a.m. They will also wait for more quarterly corporate earnings releases. Stocks will likely fluctuate following the recent rally. There have been no confirmed negative signals so far. However, we can see some short-term technical overbought conditions.

The S&P 500 futures contract trades within an intraday uptrend, as it retraces some of an overnight decline. The nearest important level of resistance is at around 2,950. On the other hand, the support level is at 2,930-2,935, among others. The futures contract is close to the record high, as the 15-minute chart shows:

Nasdaq - Short-Term Consolidation

The technology Nasdaq 100 futures contract continues to trade within a short-term consolidation. It reached the new record high of around 7,880 recently. Investors will wait for today's after-hours Apple's quarterly earnings release. The resistance level is at 7,850-7,900. On the other hand, the support level is at 7,750-7,800. The Nasdaq futures contract remains close to the 7,800 mark this morning, as we can see on the 15-minute chart:

Apple - Uncertainty Ahead of Earnings Release

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock accelerated its uptrend recently and it broke above the $200 level. On Wednesday the market reached another new medium-term high, but then it broke slightly below the medium-term upward trend line. We may see an increased volatility following the quarterly earnings release today after the session's close:

Now let's take a look at the daily chart of Microsoft Corp. (MSFT). The stock accelerated its uptrend on Thursday, as it reached the new record high of $131.37. Investors reacted to the Wednesday's better-than-expected quarterly earnings release. For now, it looks like blow-off topping pattern. We can see some clear technical overbought conditions:

Dow Jones - No Clear Direction

The Dow Jones Industrial Average was relatively weaker than the broad stock market recently. The resistance level remains at around 26,800-27,000, marked by the last year's topping pattern and the record high of 26,951.8. On Tuesday the blue-chip stocks' gauge reached the new medium-term high. But then it traded closer to the 26,500 mark again. There have been no confirmed negative signals so far. However, we can see some negative technical divergences:

The S&P 500 index has reached the new record high yesterday following breaking above the last week's local highs. The broad stock market extends its medium-term uptrend, as investors' sentiment remains very bullish following economic data, quarterly corporate earnings releases. However, we can see short-term technical overbought conditions that may lead to a downward correction at some point.

Concluding, the S&P 500 index will likely open virtually flat today. We may see a short-term consolidation following the recent run-up.

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