The major U.S. stock market indexes gained 0.1-0.3% yesterday, extending their short-term consolidation. Investors didn’t react much to Ben Bernanke’s testimony, but they may have another such chance today. For now it looks like a flat correction of the S&P500 index’s recent uptrend, with price fluctuations just below the May 22 all-time high at 1,687.18. It is a difficult situation for investors, as the market may go in two quite opposite directions. The bullish scenario assumes a breakout above the recent top, as the daily chart shows:

In case of the bearish scenario, the market may dive back into a few-month long consolidation range with the support level at around 1,550. Much may depends on the remaining quarterly earnings releases. In the short-term the S&P500 futures contract (CFD) fluctuates below the resistance zone at 1,675-1,685. The nearest support level is at around 1,665, so the volatility is low. The market is still above last Wednesday’s Fed-fueled after-hours move up, as we can see on the 15-minute chart:

The cash market is expected to open slightly higher today, as the main European stock markets have stayed in their analogous short-term consolidation areas. Investors will wait for some U.S. economic data announcements now: Initial Claims at 7:30 a.m., Philadelphia Fed and Leading Indicators at 10:00 a.m.

Thank you,
Paul Rejczak