Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective (S&P 500 index). We decided to close our short position this morning, because the S&P 500 index broke above the 3,000 mark and it invalidated our bearish scenario.
Intraday outlook: The broad stock market will likely open slightly higher again today. Then we may see a consolidation following the recent rally.
The U.S. stock market indexes gained 0.5-0.9% on Friday, as investors' sentiment remained bullish ahead of quarterly earnings releases, among other factors. The S&P 500 index reached the new record high of 3,013.92 on Friday. It gained around 285 points from its early June local low of 2,728.81. The Dow Jones Industrial Average gained 0.9% and the Nasdaq Composite gained 0.6% on Friday.
The nearest important resistance level of the S&P 500 index is now at around 3,020. On the other hand, the support level is now at 2,995-3,000, marked by the recent resistance level. The support level is also at 2,985, marked by the Wednesday's daily gap up of 2.981.90-2,984.62.
The broad stock market broke above its short-term consolidation recently and it broke the 3,000 mark. Is this a real bullish breakout above the last year's September-October topping pattern? The S&P 500 extends its half-year-long run-up:
Positive Expectations Again
The index futures contracts trade 0.2% above their Friday's closing prices, so expectations before the opening of today's trading session are slightly positive again. The European stock market indexes have been mixed so far. Investors will wait for the Empire State Manufacturing Index release at 8:30 a.m.
The S&P 500 futures contract trades within an intraday consolidation, as it remains close to the new record high this morning. The nearest important support level is now at 3,010-3,015. The futures contract continues to trade along the short-term upward trend line, as we can see on the 15-minute chart:
Nasdaq Also Higher
The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation along the new record high. It got even closer to the 8,000 mark. The support level remains at 7,850-7,900. The Nasdaq futures contract remains above its two-day-long upward trend line, as the 15-minute chart shows:
Amazon Trading Sideways, Apple Still Below Previous Highs
Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock broke slightly above the resistance level of $200 recently. Then we saw a short-term consolidation, as the market fluctuated below the early May local highs. The resistance level remains at $210-215, and the support level is at $195-200:
Now let's take a look at the daily chart of Amazon.com, Inc. stock (AMZN). The stock broke above its early May local high last week and it got closer to the price of $2,000. Then it accelerated higher. There is another resistance level of around $2,050, marked by the last year's record high of $2,050.50. On the other hand, the support level is now at $1,970-2,000:
Dow Jones' Record-Breaking Rally
The Dow Jones Industrial Average reached the new record high of 27,333.79 on Friday. There have been no confirmed negative signals so far. However, we still can see some short-term overbought conditions:
The S&P 500 index reached the new record high on Friday, as investors' sentiment remained bullish following the recent advances. But will the uptrend continue? We may see some short-term uncertainty following the breakout above 3,000 mark.
Concluding, the S&P 500 index will likely open slightly higher today. It will likely reach another new record high this morning. However, we could see a profit-taking action at some point. Investors will wait for the coming quarterly earnings releases.
Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective (S&P 500 index). We decided to close our short position this morning, because the S&P 500 index broke above the 3,000 mark and it invalidated our bearish scenario.
Thank you.
Paul Rejczak
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care
