Briefly:

Intraday trade: Our Thursday's intraday outlook was neutral. The S&P 500 index lost 0.6% after opening 0.3% lower. So, it was a quite neutral intraday trading action. The market retraced some of its recent move up and it got back below the level of 2,700. We may see some more short-term uncertainty today. Therefore, we prefer to be out of the market, avoiding low risk/reward ratio trades.

Medium-term trade: In our opinion, no medium-term positions are justified.

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 lost between 0.3% and 0.8% on Thursday, retracing some of their recent run-up, as investors took short-term profits off the table. The S&P 500 index is back slightly below the level of 2,700 again and it currently trades 6.3% below its January 26 record high of 2,872.87. The Dow Jones Industrial Average lost 0.3% and the technology Nasdaq Composite lost 0.8%, as it was relatively weaker than the broad stock market yesterday.

The nearest important level of resistance of the S&P 500 index is now at around 2,700-2,705, marked by yesterday's daily gap down of 2,702.84-2,703.63. The next resistance level is at 2,715-2,720, marked by Wednesday's daily high. The resistance level is also at around 2,740, marked by some March local highs and March 19 daily gap down of 2,741.38-2,749.97. On the other hand, the nearest important support level is now at at 2,685-2,695, marked by Tuesday's daily gap up of 2,686.49-2,692.05. The support level is also at 2,665, marked by Monday's daily low.

Stocks are in the middle of their over two-month-long consolidation following early February sell-off. The market bounced off its year-long medium-term upward trend line few weeks ago. Is this a bottoming pattern before another leg higher within the long-term bull market? Or just pause before another wave of selling? So, there are still two possible future scenarios - bearish that will lead us below February low following trend line breakdown, and the bullish one in a form of medium-term double top pattern or breakout towards 3,000 mark. For now, the S&P 500 index got closer to its mid-March consolidation below the level of 2,750 and then it bounced off that support level:

Short-term Uncertainty

The index futures contracts trade between 0.0% and +0.1% vs. their yesterday's closing prices. So, expectations before the opening of today's trading session are virtually flat. The main European stock market indexes have gained 0.1-0.5% so far. Investors' sentiment worsened yesterday, and we may see some more fluctuations today. The index will probably remain close to 2,700 mark, as it looks like a downward correction and not a new downtrend. There will be no new economic data announcements today. Investors will wait for more quarterly earnings releases.

The S&P 500 futures contract trades within an intraday consolidation following yesterday's decline. For now, it looks like a downward correction after a week-long advance. The nearest important level of support is at around 2,680-2,685, marked by local lows. On the other hand, resistance level is at 2,700-2,705. The next level of resistance is at 2,715-2,720, marked by recent local highs. The futures contract trades along its two-day-long downward trend line, yet it remains above previous resistance level, as we can see on the 15-minute chart:

Nasdaq Bounces Off New Low

The technology Nasdaq 100 futures contract follows a similar path, as it fluctuates after yesterday's move down. The market reached new local low today. The nearest important level of support is at around 6,730-6,750. On the other hand, level of resistance is at 6,790-6,800, and the next resistance level is at 6,820-6,830, among others. The Nasdaq futures contract trades within an intraday consolidation, as the 15-minute chart shows:

Apple, Amazon - Very Mixed Picture

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). It accelerated its uptrend recently following Monday's breakout above resistance level of $175. But yesterday's session was bearish, as the price got back down closer to $170. Is this a downward reversal or just quick correction? There are still medium-term negative technical divergences, and the resistance level that remains at $180-183.5. The nearest important level of resistance is at $175 again:

Now let's take a look at Amazon.com, Inc. stock (AMZN) daily chart. It remained relatively stronger than the broad stock market yesterday, as continued higher above $1,500. Will it reach its March record high again? Amazon will release its earnings report on April 26, and we may see "buy the rumor, sell the news" action. Potential level of resistance is now at around $1,600:

Dow Jones - Consolidation Following Breakout

The Dow Jones Industrial Average broke above its medium-term downward trend line, and it got closer to 25,000 mark again. On Tuesday we wrote that it was a possible short-term scenario. And it came true. What's next? We may see some more uncertainty closer to the above-mentioned 25,000 resistance level. On the other hand, support level is now at around 24,500, marked by the trend line:

The early March rally failed to continue following monetary policy tightening, trade war fears, among others. What was just profit-taking action, quickly became a meaningful downtrend. Breakdown below over-month-long rising wedge pattern made medium-term bearish case more likely, and after some quick consolidation, the index accelerated towards its early February low. Just like we wrote in our several Stocks Trading Alerts, the early February sell-off set the negative tone for weeks or months to come. However, recent fluctuations were a bottoming pattern before upward reversal. It looks like Monday's breakout confirmed change of trend. At least from a short-term perspective. Yesterday's retracement was a correction so far.

Concluding, the S&P 500 index may extend its fluctuations along the level of 2,700 today. For now, it looks like a short-term downward correction within a new uptrend. Quarterly corporate earnings releases outweigh trade war fears, Syrian conflict escalation worries at this moment.

Currently, we prefer to be out of the market, avoiding low risk/reward ratio medium-term trades. We will let you know when we think it is safe to get back in the market.

To summarize: no medium-term positions are justified from the risk/reward perspective at this moment.

Intraday trade:

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

No medium-term position is justified from the risk/reward perspective at this moment.

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts