Briefly:
Intraday trade: The S&P 500 gained 0.2% on Thursday, after opening virtually flat. The market will probably open slightly higher today. But first investors will react to economic data releases at 8:30 a.m.
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 -0.1% and +0.6% on Thursday, extending their short-term fluctuations, as investors awaited today’s monthly jobs data release, among other factors. The S&P 500 index retraced more of its October-December downward correction of 20.2% on Wednesday. The broad stock market's gauge is now just 2.1% below September the 21st record high of 2,940.91. The Dow Jones Industrial Average gained 0.6% and the Nasdaq Composite lost 0.1% on Thursday.
The nearest important resistance level of the S&P 500 index remains at 2,890-2,900, marked by some early October local highs. The next resistance level is at 2,920-2,940, marked by the mentioned record high, among others. On the other hand, the support level is now at 2,860-2,865, marked by some recent local lows. The next support level remains at 2,835-2,845, marked by the Monday’s daily gap up of 2,836.03-2,848.63.
The broad stock market retraced all of its December sell-off and it broke above the medium-term resistance level of around 2,800-2,820, marked by the October-November local highs recently. So is it still just a correction or a new medium-term uptrend? The market broke above the 61.8% Fibonacci retracement of the 20% decline. And we may see an attempt at getting back to the record high. There have been no confirmed negative medium-term signals so far. The index gets closer to its last October all-time high, as we can see on the daily chart:
Uncertainty Ahead of Economic Data Releases
Expectations before the opening of today's trading session are slightly positive, because the index futures contracts trade 0.1-0.2% above their yesterday’s closing prices. The European stock market indexes have been mixed so far. Investors will wait for the important jobs data release: Non-Farm Employment Change, Unemployment Rate at 8:30 a.m. The broad stock market will likely fluctuate following its recent rally. We may see some profit-taking action at some point. But there have been no confirmed negative signals so far.
The S&P 500 futures contract trades within an intraday consolidation following an overnight advance. The nearest important resistance level remains at around 2,885-2,890. On the other hand, the support level is at 2,870-2,875, marked by the recent resistance level. The futures contract remains close to the local highs, as the 15-minute chart shows:
Nasdaq Also Going Sideways
The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation. The market extended its medium-term uptrend recently, as it broke above the 7,600 level. It has retraced most of the late last year’s sell-off. The nearest important resistance level is at 7,600-7,650. On the other hand, the support level is now at 7,500-7,550. The Nasdaq futures contract extends its short-term consolidation this morning, as we can see on the 15-minute chart:
Big Cap Tech Stocks Trade Along Local Highs
Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The market broke above its recent local highs more than a week ago and then it continued above the $180 level. The stock accelerated the uptrend and it traded within a resistance level of $190-200. It is back at the resistance level again:
Now let's take a look at the daily chart of Microsoft Corp. (MSFT). The price continues to trade along its new record high. The resistance level is at around $120. The market is still above the three-month-long upward trend line:
Dow Jones Breaking Higher
The Dow Jones Industrial Average broke above its February local high yesterday and it resumed the medium-term uptrend. The next resistance level is at around 26,800-27,000, marked by the last year’s topping pattern and the record high of 26,951.8:
The S&P 500 index slightly extended its short-term uptrend on Wednesday, as it got the highest since the early October. We wrote that the recent consolidation looked like a relatively flat correction within a three-month-long uptrend. And we were right. But will the market reach its last year’s record high? There may be some uncertainty, as the S&P 500 gets closer to the 2,900 resistance level.
Concluding, the S&P 500 index will likely open slightly higher today. But first investors will await the mentioned monthly jobs data release. 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
