Trading position (short-term; our opinion): Short position with a stop-loss level at 2,970 and the downside target of 2,840 (S&P 500 index) remains justified from the risk/reward perspective.

Intraday outlook: The broad stock market will likely open virtually flat to slightly higher today. We may see more short-term volatility following this month's rally.

The U.S. stock market indexes were mixed between 0.0% and +0.7% on Thursday, as they continued to fluctuate following Tuesday's decline. The S&P 500 index reached the record high of 2,964.15 on Friday, but then it came back below the 2,950 mark again. The index gained more than 230 points from its early June local low of around 2,729. The Dow Jones Industrial Average was unchanged and the Nasdaq Composite gained 0.7% yesterday.

The nearest important resistance level of the S&P 500 index remains at 2,945-2,950, marked by the recent short-term local lows. On the other hand, the support level is at 2,895-2,905, marked by June the 18th daily gap up of 2,897.27-2,905.44.

The broad stock market broke above the last year's high in the early May. But then the S&P 500 index retraced all of the April's advance. It got back higher following breaking above the month-long downward trend line. Then it reached the new record high on Friday, but we can see some selling pressure along the previous medium-term local highs:

More Short-Term Fluctuations

The index futures contracts trade between +0.1% and +0.2% vs. their Thursday's closing prices, so expectations before the opening of today's trading session are virtually flat to slightly higher. The European stock market indexes have gained 0.2-0.4% so far. Investors will wait for some economic data announcements this morning: Personal Income, Personal Spending at 8:30 a.m., Chicago PMI at 9:45 a.m., Revised UoM Consumer Sentiment at 10:00 a.m. The broad stock market will likely extend its short-term consolidation. There have been no confirmed positive 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 2,935-2,940, marked by the short-term local highs. On the other hand, the support level is at 2,920-2,925. The futures contract is now above the week-long downward trend line, 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 7,700-7,750. On the other hand, the support level is at 7,600-7,650. The Nasdaq futures contract trades along the three-day-long upward trend line, as we can see on the 15-minute chart:

Big Cap Tech Stocks - No Clear Short-Term Direction

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock is bouncing off the resistance level of $200 recently. The market remains within a short-term consolidation following the early June rally:

Now let's take a look at the daily chart of Microsoft Corp. (MSFT). The stock reached the new record high of $138.40 on Monday, following breaking above the short-term consolidation last week. But Tuesday's trading session was bearish, as the price fell to the previous short-term consolidation. For now, it looks like a downward correction:

Dow Jones Still at 26,500

The Dow Jones Industrial Average has been relatively weaker than the broad stock market since February. The resistance level remained at around 26,800-27,000, marked by the last year's topping pattern and the record high of 26,951.8. On Friday the index reached the new medium-term high, following breaking above its late April consolidation. However, on Tuesday it retraced the recent advance:

The S&P 500 index reached the new record high on Friday a week ago, before reversing its upward course and closing lower. So was it a downward reversal or just quick profit-taking action before another leg higher? Tuesday's trading session was quite bearish, but since then we can see a sideways trading action. There may be some more volatility following the recent advances. The broad stock market remains below the important medium-term resistance level, marked by the previous local highs.

Concluding, the S&P 500 index will likely open virtually flat to slightly higher today. The market may extend a consolidation following the early June rally,

Trading position (short-term; our opinion): Short position with a stop-loss level at 2,970 and the downside target of 2,840 (S&P 500 index) remains justified from the risk/reward perspective.

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care