The main U.S. stock market indexes lost 0.1-0.3% on Friday, extending their recent downtrend. Investors continue to take profits after the June-August run up, fearing the Federal Reserve may soon limit its monetary stimulus program. The S&P500’s decline stopped exactly at the important 38.2% Fibonacci retracement of the June-August uptrend (1,652.62 vs. Friday’s daily low at 1,652.61). The next possible level of support is at 1,635.00, marked by the 50% retracement of the June-August uptrend. On the other hand, the resistance level is at 1,679.61-1,684.83, marked by the August 15 daily gap down. The market is in a correction phase, as we can see on the daily chart:

Expectations before the opening of today’s session are virtually flat, as the European stock market indexes have lost 0.3-0.6%. The S&P500 futures contract (CFD) is in a clear short-term downtrend, testing a potential level of support at around 1,650 now, marked by the June consolidation’s upper limit. The CFD is the lowest since July 10, when the Fed indicated that its efforts to boost the economy would continue. The nearest resistance level is at around 1,660-1,665, as the 15-minute chart shows:

Thank you,
Paul Rejczak