Briefly:

Intraday trade: The S&P 500 was unchanged on Tuesday, after opening 0.2% higher. The market will probably open virtually flat today. We may see some short-term uncertainty as investors await the Fed's Rate Decision announcement at 2:00 p.m.

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 were mixed between -0.1% and +0.1% on Tuesday, as investors hesitated following the recent rally. However, the S&P 500 index retraced more of its October-December downward correction of 20.2%. The broad stock market's gauge is just 3.7% below September the 21st record high of 2,940.91. The Dow Jones Industrial Average lost 0.1% and the Nasdaq Composite gained 0.1% on Tuesday.

The nearest important resistance level of the S&P 500 index remains at 2,850-2,860, marked by the early October local lows. The resistance level is also at around 2,875, marked by October the 10th daily gap down of 2,874.02-2,874.27. On the other hand, the support level is at 2,800-2,810, marked by the recent resistance level and the daily gap up of 2,798.32-2,799.78. The support level is also at 2,785, marked by the daily gap up of 2,784.00-2,786.73.

The broad stock market retraced all of its December sell-off and it broke slightly above the medium-term resistance level of around 2,800-2,820, marked by the October-November local highs recently. So is it still just a correction or a new medium-term uptrend? The market broke above the 61.8% Fibonacci retracement of the 20% decline. And we may see an attempt at getting back to the record highs. But will the index continue much higher above the mentioned previous local highs? There have been no confirmed negative signals so far. The index is still close to the previously broken two-month-long upward trend line:

Short-Term Consolidation

Expectations before the opening of today's trading session are virtually flat, because the index futures contracts trade along their yesterday's closing prices. The European stock market indexes have lost 0.1-1.2% so far. Investors will wait for some important economic data announcements today: Crude Oil Inventories at 10:00 a.m., the FOMC Statement at 2:00 p.m. The broad stock market will likely fluctuate following the recent advance. We may see an increased volatility after the mentioned Rate Decision release.

The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates following yesterday's intraday decline. The nearest important resistance level is at around 2,850-2,860. On the other hand, the support level is at 2,825-2,830, marked by the short-term local low. The futures contract is now below its three-day-long upward trend line, as we can see on the 15-minute chart:

Nasdaq Slightly Below 7,400 Mark

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation. The market rallied almost 1,600 points from December the 26th local low of around 5,820. The nearest important resistance level is now at 7,400-7,450. On the other hand, the support level is at 7,300-7,350, marked by the recent resistance level. The Nasdaq futures contract continues to trade close to the 7,400 mark, as the 15-minute chart shows:

Apple, Amazon - New Uptrend or Still Just Correction?

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The market broke above its recent local highs a week ago and then it continued above the $180 level. The next resistance level is at $190-200. 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 price broke above the previous local high on Monday and yesterday it got slightly above the $1,750 resistance level. The market extends the recent run-up above the broken downward trend line. However, it still trades along the previous medium-term highs:

Dow Jones Relatively Weaker

The Dow Jones Industrial Average retraced some more of its recent decline on Tuesday, following bouncing off the support level of around 25,000-25,500 a week ago. However, it reversed its upward course and closed slightly lower yesterday. For now, it looks like an upward correction. But if the blue-chip stocks' gauge breaks above the 26,000 level, we could see more buying pressure:

The S&P 500 index extended its short-term uptrend yesterday, as it got the highest since October the 10th again. The market came back to the previously broken two-month-long upward trend line recently. So will it act as a resistance level? We could see some short-term uncertainty, as stocks reach their previous medium-term highs.

Concluding, the S&P 500 index will likely open virtually flat today. We may see an increased volatility after the Rate Decision release at 2:00 p.m. There may be some more short-term profit-taking action following the recent rally.

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