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

Intraday outlook: The broad stock market will likely open lower today and the S&P 500 index may get back to the 2,900 mark. We could see more short-term fluctuations following the recent decline.

The U.S. stock market indexes gained 1.5-2.0% on Tuesday, retracing their Friday's-Monday's sell-off, as investors reacted to the Trump's decision to delay trade tariffs. The S&P 500 index fell over 200 points from its previous Friday's record high of 3,027.98 early last week. Then it retraced more than 120 points of that sell-off. The Dow Jones Industrial Average gained 1.5% and the Nasdaq Composite gained 2.0% on Tuesday.

The nearest important resistance level of the S&P 500 index is now at around 2,945-2,950, marked by local highs. On the other hand, the support level is at 2,875-2,900.

The broad stock market broke below its two-month-long upward trend line recently, and then it quickly retraced most of the June-July advance. The S&P 500 index remains below the previous medium-term local highs. For now, it looks like a consolidation following the January-February advance. However, it could also play out as a long-term topping pattern ahead of a more meaningful downward correction:

More Short-Term Volatility, Negative Expectations

The index futures contracts trade 0.9% below their yesterday's closing prices. So expectations before the opening of today's trading session are negative. The European stock market indexes have lost 1.0-1.4% so far. Investors will wait for the Crude Oil Inventories number release at 10:30 a.m.

The S&P 500 futures contract trades within an intraday downtrend, as it retraces some of its yesterday's advance. The nearest important support level is at around 2,900. On the other hand, the resistance level is at 2,930-2,940. The futures contract remains within its late last week's short-term consolidation, as we can see on the 15-minute chart:

Nasdaq 100 Also Lower

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday downtrend. It got back closer to the 7,800 mark yesterday, before going sideways and retracing some of the rally this morning. The nearest important support level is at 7,650. The Nasdaq futures contract is at the previous local high, as the 15-minute chart shows:

Big Cap Tech Stocks

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock retraced most of the recent decline yesterday, as it got back to the broken upward trend line. The resistance level is at $210-215.

Now let's take a look at the daily chart of Microsoft Corp. stock (MSFT). The stock is trading at the broken upward trend line. It remains relatively close to the late July record high. The resistance level remains at $140-145:

Dow Jones - More Fluctuations

The Dow Jones Industrial Average broke below its upward trend line in late July. Then the market came back below the 26,000 mark. There we saw short-term oversold conditions. And the index bounced off its 200-day moving average. For now, it looks like a consolidation within a downtrend:

The S&P 500 index broke below the upward trend line recently, as investors reacted to the Fed's Rate Decision release, among other factors. We saw technical overbought conditions along with negative technical divergences in the late July. And the market declined following renewed trade war fears. It reversed its short-term downtrend a week ago. However, it still looks like a correction or a consolidation within a downtrend.

Concluding, the S&P 500 index will likely open lower today. The market may extend its over week-long consolidation following the late July - early August sell-off.

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