Briefly:

Intraday trade: The S&P 500 gained 0.5% on Tuesday, after opening 0.1% higher. The market will probably open slightly lower to virtually flat today. Then we may see some profit-taking action following the recent rally.

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 gained 0.5-0.7% on Tuesday, extending their short-term uptrend as investors' sentiment remained bullish following the recent quarterly corporate earnings, economic data releases. The S&P 500 index broke above its short-term consolidation on Wednesday a week ago and it continued higher. The market is now above the 61.8% Fibonacci retracement of its October-December downward correction of 20.2% (2,713.88). It has gained 390 points from the late December medium-term low, but it is still around 200 points below the September 21st record high of 2,940.91. Both the Dow Jones Industrial Average and the Nasdaq Composite gained 0.7% on Tuesday.

The nearest important resistance level of the S&P 500 index is at 2,750-2,760, marked by some previous local highs. The resistance level is also at 2,800, marked by the early December local high. On the other hand, the support level is at 2,700-2,710, marked by the previous resistance level. The support level is also at 2,650.

The broad stock market broke below its two-month-long trading range in the mid-December, as the S&P 500 index fell below the level of 2,600. Then the market accelerated lower and it broke below the 2,400 mark. Since then, it has retraced more than 61.8% of the whole decline off the September high. The index gets closer to its October-November local highs and the resistance level of 2,800, as we can see on the daily chart:

Short-Term Correction Coming?

The index futures contracts trade 0.1% below their Tuesday's closing prices. So expectations before the opening of today's trading session are slightly negative. The European stock market indexes have lost 0.1-0.5% so far. Investors will wait for some economic data announcements this morning: Nonfarm Productivity number, Trade Balance at 8:30 a.m., Crude Oil Inventories at 10:30 a.m. There will also be a speech from the Fed Chair Powell at 7:00 p.m. The broad stock market will likely fluctuate following the recent advances. We may see some profit-taking action. However, there have been no confirmed negative signals so far.

The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates following yesterday's advance. The nearest important resistance level is now at around 2,730-2,735, marked by the short-term local highs. On the other hand, the support level is at 2,715-2,720, among others. The futures contract is now slightly below the short-term downward trend line, as we can see on the 15-minute chart:

Nasdaq Close to 7,000

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation. The market gained over 1,200 points from December the 26th local low of around 5,820 in the recent weeks. And we can see some short-term technical overbought conditions. The nearest important resistance level is now at 7,000-7,050. The support level is at 6,950, marked by the previous resistance level. The Nasdaq futures contract fluctuates along the 7,000 level this morning, as the 15-minute chart shows:

Apple Keeps Rallying, Amazon Going Sideways

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). Apple released its quarterly earnings on last week's Tuesday after the trading session's close. Then the stock broke above its recent trading range and the resistance level of $155-160. It retraced some more of its November-December sell-off. There have been no confirmed negative signals so far:

Now let's take a look at the daily chart of Amazon.com, Inc. (AMZN). The market broke above one of its three-month-long downward trend lines recently. Since then it has been going sideways. There is a resistance level at around $1,700-1,750. On Friday it bounced off that resistance level following Thursday's quarterly earnings release:

Dow Jones Extends the Uptrend

The Dow Jones Industrial Average extended its short-term uptrend again yesterday after breaking above its medium-term downward trend line. Will the blue-chip stocks' gauge continue higher and reach its record high again? Or reverse lower in the near term? There have been no confirmed negative signals so far:

The S&P 500 index broke above its short-term consolidation a week ago on Wednesday, as investors reacted to the Fed's Rate Decision release. Is this a new medium-term uptrend or still just upward correction before another medium-term leg lower? The market trades above the 61.8% Fibonacci retracement of the whole medium-term decline. There have been no confirmed negative signals so far. But we still can see some short-term technical overbought conditions.

Concluding, the S&P 500 index will likely open slightly lower to virtually flat today. We may see some profit-taking action in the near term. However, 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