Briefly:
Intraday trade: The S&P 500 index gained 0.3% on Wednesday, after opening 0.6% higher. The broad stock market will probably open slightly higher today. We may see some more short-term fluctuations. Today's trading session will be shortened and the Stock Trading Alert will also be shortened today.
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 0.0% and +0.9% on Wednesday, as investors hesitated following the recent rout. The S&P 500 index remained close to the level of 2,650. It got closer to its late October low of 2,603.54 recently. The index is currently trading 9.9% below September the 21st record high of 2,940.91. The Dow Jones Industrial Average was unchanged and the Nasdaq Composite gained 0.9% on Wednesday.
The nearest important level of resistance of the S&P 500 index is at 2,670-2,680, marked by Tuesday's daily gap down of 2,669.44-2,681.09. The next resistance level is at 2,690-2,700, marked by the previous level of support. On the other hand, the level of support is at 2,600-2,630, marked by the late October lows.
The broad stock market got closer to its late October low once again. The S&P 500 index is now trading around 10% below the record high. So will the downtrend continue? Or is this a bottoming pattern before an upward reversal? There have been no confirmed positive signals so far. The market continues to trade below its long-term upward trend line, as we can see on the daily chart:
Short-Term Consolidation
Expectations before the opening of today's trading session are slightly positive, because the index futures contracts trade 0.1-0.4% higher. And the European stock market indexes have been mixed so far. Investors will wait for the Flash Manufacturing PMI, Flash Services PMI numbers release at 9:45 a.m. We still can see short-term oversold conditions and the broad stock market will likely extend its consolidation following the recent sell-off. There have been no confirmed positive signals so far.
The S&P 500 futures contract trades within an intraday consolidation. The nearest important level of resistance is at around 2,645-2,650, marked by the recent local highs. On the other hand, the support level is at 2,625-2,630, marked by the local lows. The futures contract trades sideways, as the 15-minute chart shows:
Nasdaq Also Sideways
The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation. The tech stocks' gauge accelerated the downtrend on Tuesday and it reached the new low of around 6,450. It was the lowest since the late April. The nearest important level of resistance remains at 6,600-6,650. On the other hand, the support level is at 6,450-6,500. The Nasdaq futures contract continues to trade slightly above 6,500 mark, as we can see on the 15-minute chart:
The S&P 500 index broke below its last week's local low on Tuesday, as it accelerated the short-term downtrend. It traded closer to a potential support level of 2,600-2,630, marked by the late October local lows. We can see some short-term oversold conditions that may lead to an upward correction. However, there have been no confirmed positive signals so far.
Concluding, the S&P 500 index will likely open slightly higher today. For now, it looks like a consolidation within a downtrend. We may see a lower volatility because of the long holiday weekend.
Trading position (short-term; our opinion): no positions are justified from the risk/reward perspective.
Thank you.
Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts
