Briefly:
Intraday trade: Our Friday's neutral intraday outlook has proved accurate. The S&P 500 index extended its short-term consolidation. The market may continue to fluctuate today. There have been no confirmed positive signals so far. On the other hand, the S&P 500 index remains above support level marked by last week's Tuesday's daily gap up of 2,430.58-2,433.67, and there is no clear short-term downtrend. Therefore, we prefer to be out of the market today, avoiding low risk/reward ratio trades.
Our intraday outlook remains neutral, and our short-term outlook is bearish, as we expect downward correction. Our medium-term outlook remains bearish:
Intraday outlook (next 24 hours): neutral
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): bearish
The U.S. stock market indexes were mixed between -0.1% and +0.2% on Friday, extending their recent fluctuations, as investors reacted to economic data announcements, Jackson Hole Economic Policy Symposium speeches. The S&P 500 index remained within a relatively narrow trading range, as it traded along the level of 2,450. It is currently 1.9% below the August 8 all-time high of 2,490.87. The Dow Jones Industrial Average remains close to 21,800 mark, and the technology Nasdaq Composite trades 3.0% below its record high of 6,460.84. The nearest important level of resistance of the S&P 500 index remains at 2,450-2,455, marked by last week's Tuesday's local high. The next resistance level is at 2,465-2,475, marked by previous support level and local highs. The resistance level is also at 2,490-2,500, marked by the above-mentioned all-time high. On the other hand, support level is at 2.430-2,435, marked by Tuesday's daily gap up of 2,430.58-2,433.67. The next support level remains at 2,400-2,420. The market retraced some of its recent downtrend on Tuesday, but then it failed to extend its short-term uptrend. There have been no confirmed positive signals so far. We still can see some negative technical divergences. But will they lead to medium-term downward correction? The S&P 500 index continues to trade within a medium-term consolidation following early June breakout above 2,400 mark, as we can see on the daily chart:
More Fluctuations?
Expectations before the opening of today's trading session are virtually flat, with index futures currently down 0.1% vs. their Friday's closing prices. The European stock market indexes have lost 0.1-0.5% so far. Investors will now wait for the Wholesale Inventories number release at 8:30 a.m. The market expects that it grew 0.8% in July. The S&P 500 futures contract trades within an intraday uptrend following an overnight move down. The nearest important level of resistance is at around 2,445-2,450, marked by short-term local highs. The next resistance level is at around 2,455, marked by last Tuesday's local highs. On the other hand, support level is at 2,430-2,435, marked by previous level of resistance and some local lows. Will the market continue its last week's Tuesday's rally?
Nasdaq Relatively Weaker
The technology Nasdaq 100 futures contract trades within an intraday uptrend, as it retraces an overnight move down. The nearest important level of resistance remains at 5,830-5,840, marked by some short-term local highs. The next level of resistance is at 5,850-5,870, among others. On the other hand, support level is at 5,800, marked by local lows. The market trades within a short-term consolidation following last week's Tuesday's rally, as the 15-minute chart shows:
Concluding, the S&P 500 index remained within short-term consolidation on Friday, following Tuesday's rally. Is this a new uptrend or just more consolidation after November-August move up? There have been no confirmed short-term positive signals so far. We still can see some medium-term overbought conditions along with negative technical divergences.
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Paul Rejczak
Stock Trading Strategist
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