Briefly:

Intraday trade: The S&P 500 index gained 0.8% on Thursday, after opening 0.4% higher. The broad stock market will probably open slightly higher today. Then we may see some short-term profit taking action. We prefer to be out of the market, avoiding low risk/reward ratio trades.

Trading position (short-term; our opinion): no short-term positions are justified from the risk/reward perspective.

Our intraday outlook is neutral. Our short-term outlook is neutral, and our medium-term outlook is neutral:

Intraday outlook (next 24 hours): neutral
Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): neutral

The U.S. stock market indexes gained 0.8-1.0% on Thursday, breaking above their recent trading range, as investors' sentiment much improved despite some trade war fears. The S&P 500 index has reached the new record high of 2,934.80. Both the Dow Jones Industrial Average and the technology Nasdaq Composite gained 1.0% yesterday.

The nearest important level of support of the S&P 500 index is now at 2,915-2,920, marked by yesterday's daily gap up of 2,912.36-2,919.73. The next support level is at 2,900. The support level is also at 2,885-2,890, marked by the recent local lows. On the other hand, potential level of resistance is at around 2,950.

The broad stock market reached the new record high yesterday, as the S&P 500 index extended its short-term uptrend above the level of 2,900. Will it continue higher despite some short-term technical overbought conditions? There have been no confirmed negative signals so far. The index continues to trade above its three-month-long upward trend line, as we can see on the daily chart:

At New Record High

The index futures contracts are trading between 0.0% and +0.1% vs. their Thursday's closing prices. So expectations before the opening of today's trading session are virtually flat. The European stock market indexes have gained 0.7-1.0% so far. Investors will wait for the Flash Manufacturing PMI, Flash Services PMI numbers release at 9:45 a.m. The broad stock market may fluctuate along its new record high today. We may see some profit-taking action. But there have been no confirmed negative signals so far.

The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates following its yesterday's rally. The nearest important level of resistance is at around 2,945, marked by the record high. On the other hand, the support level is at 2,930-2,935, among others. The futures contract trades above its over three-day-long upward trend line, as the 15-minute chart shows:

Nasdaq Closer to Late August High

The technology Nasdaq 100 futures contract follows a similar path, as it fluctuates after yesterday's advance. It is relatively weaker than the broad stock market following almost 4% downward correction off the August 30th record high of around 7,700. The nearest important level of resistance is at around 7,650-7,700, marked by the record high. On the other hand, the support level is at 7,550-7,600, among others. The Nasdaq futures contract got back above 7,600 mark, as we can see on the 15-minute chart:

Big Cap Tech Stocks Remain Relatively Weak

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). It reached the new record high at the level of $229.67 on September the 5th, before reversing lower. Then it broke below its month-long upward trend line. The resistance level remains at $225-230. On the other hand, support level is at $215. If the price breaks lower, we could see more selling pressure:

Now let's take a look at Amazon.com, Inc. stock (AMZN) daily chart. It has reached the new record high at the price of $2,050.50 recently. Since then it was retracing this record-breaking rally. The stock broke below the month-long upward trend line in the early September. We still can see negative technical divergences. Last Tuesday's intraday reversal didn't lead the market above the resistance level of $2,000. The price is at its medium-term upward trend line:

Dow Jones Reaches New All-time High

The Dow Jones Industrial Average broke above its late January high yesterday, as it reached the new record high of 26,697.49. The nearest important level of support is now at 26,500, marked by the recent resistance level. The index accelerated the uptrend above its tree-month long upward trend line. We can see some short-term technical overbought conditions:

The S&P 500 index reached the new record high at the level of 2,934.80 on Thursday following breaking above the late August local high of around 2,917. The broad stock market extends its over nine-year-long bull market, but will it continue much higher? There have been no confirmed negative signals so far. However, we may see a profit-taking action at some point.

Concluding, the S&P 500 index will likely open virtually flat to slightly higher today. Stocks may continue towards new rercord highs, but there is a growing chance of a short-term downward correction.

Intraday trade:

No intraday position is justified from the risk/reward perspective today.

Trading position (short-term; our opinion): no short-term positions are justified from the risk/reward perspective.

Thank you.

Paul Rejczak
Stock Trading Strategist
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