Briefly:

Intraday trade: The S&P 500 index lost 0.3% after opening 0.7% lower. The broad stock market will likely open slightly lower today. Then we may see a short-term consolidation.

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 lost 0.3-0.5% on Thursday, extending their short-term downtrend, as investors' sentiment worsened again following the trade war fears. The S&P 500 index retraced the whole of its April's advance. It currently trades 2.8% below its May the 1st record high of 2,954.13. The Dow Jones Industrial Average lost 0.5% and the Nasdaq Composite lost 0.4% on Thursday.

The nearest important resistance level of the S&P 500 index is at 2,890-2,900, marked by the previous support level. The resistance level is also at 2,920. On the other hand, the support level is at 2,860-2,865. The support level is also at around 2,835-2,850, marked by April the 1st 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 last year's high recently. But on Tuesday the index broke below the short-term consolidation and it retraced all of the April's advance. The market also broke below its two-month-long upward trend line, as we can see on the daily chart:

Short-Term Consolidation

Expectations before the opening of today's trading session are slightly negative, because the index futures contracts trade between -0.3% and -0.2% vs. their yesterday's closing prices. The European stock market indexes have gained 0.4-1.0% so far. Investors will wait for the Consumer Price Index release at 8:30 a.m.,

The broad stock market will likely fluctuate following its yesterday's sell-off and an intraday bounce. The index broke below the support level of around 2,890-2,900 on Tuesday, and then we saw more selling pressure. The market was below the relatively important support level of 2,850 yesterday, but then it came back higher and closed just 0.3% lower. However, there have been no confirmed positive signals so far.

The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates after its yesterday's bounce off a new low. The nearest important resistance level is at around 2,880-2,900. On the other hand, the support level is at 2,835-2,850. The futures contract is close to some previous local lows, 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 nearest important resistance level is at 7,600-7,650. On the other hand, the support level is at 7,500-7,550. The Nasdaq futures contract remains below the short-term downward trend line, as we can see on the 15-minute chart:

Tech Stocks Slightly Bouncing Back

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock extended its rally more than a week ago following the quarterly earnings release. The price got back above the broken medium-term upward trend line again. However, last week's Wednesday's intraday trading action was quite bearish. And on Monday the stock got back below the upward trend line. The resistance level remains at around $210-215:

Now let's take a look at the daily chart of Microsoft Corp. (MSFT). The stock accelerated its uptrend recently, as it reached the new record high of $131.37. Investors reacted to a better-than-expected quarterly earnings release. But it looked like a blow-off topping pattern. And we wrote about some clear technical overbought conditions. On Tuesday the stock broke slightly below its medium-term upward trend line:

Dow Jones Bounced Off 25,500 Level

The Dow Jones Industrial Average was relatively weaker than the broad stock market recently. On Tuesday the blue-chip stocks' gauge broke below its medium-term upward trend line. 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. Yesterday the blue chip stocks' gauge bounced off following an intraday sell-off below the 25,500 mark. For now, it looks like an upward correction:

The S&P 500 index has reached the new record high last week after breaking above the recent local highs. The broad stock market extended its medium-term uptrend, as investors' sentiment remained very bullish following economic data, quarterly corporate earnings releases. However, on Tuesday it retraced its April's advance following the renewed trade war fears. And yesterday it sold off below the 2,850 mark, before reversing higher and closing just 0.3% lower vs. the Wednesday's closing price. We may see some more short-term volatility, as stocks trade at their previous resistance level.

Concluding, the S&P 500 index will likely open slightly lower today. The market may fluctuate following the recent decline.

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