Briefly:

Intraday trade: The S&P 500 index gained 0.5% on Thursday, after opening 0.3% higher. The broad stockmarket will probably open virtually flat today. We may see more short-term fluctuations following the late August rally. We prefer to be out of the market, avoiding low risk/reward ratio trades.

Trading position (short-term; our opinion): no short-term positions are justified from the risk/reward perspective.

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 gained between 0.5% and 0.8% on Thursday, retracing some of their recent decline, as investors' sentiment improved again. The S&P 500 index has reached the record high of 2,916.50 on August the 29th. It currently trades just 0.4% below that high. The Dow Jones Industrial Average gained 0.6% and the technology Nasdaq Composite gained 0.8% yesterday.

The nearest important level of support of the S&P 500 index is now at around 2,895-2,900, marked by yesterday's daily gap up of 2,894.65-2,896.39 and the recent resistance level of 2,900. The next support level is at 2,880, marked by the Wednesday's daily low. The support level is also at around 2,860-2,865, marked by the recent fluctuations. On the other hand, the nearest important level of resistance is now at 2,910-2,915, marked by the mentioned record high.

The broad stock market reached the new record high in the late August, as it extended its short-term uptrend above the level of 2,900. Since then it trades within a consolidation. The market retraced its late August advance, and it got back down to the support level of its late January high recently. Will it continue lower or reverse higher towards new all-time highs? The index continues to trade above its medium-term upward trend line, as we can see on the daily chart:

Closer to Record High

The expectations before the opening of today's trading session are virtually flat, because the index futures contracts trade between -0.1% and +0.1% vs. their yesterday's closing prices. The European stock market indexes have gained 0.3-0.4% so far. Investors will wait for series of economic data announcements today: Retail Sales at 8:30 a.m., Industrial Production, Capacity Utilization Rate at 9:15 a.m., Michigan Sentiment number, Business Inventories at 10:00 a.m. The broad stock market will probably fluctuate following its yesterday's advance. The index got closer to its late August record high, but will it continue higher? There have been no confirmed negative medium-term signals so far.

The S&P 500 futures contract trades within an intraday consolidation following an overnight advance. The market is close to the record highs, as it remains above 2,900 mark. But will it continue above that resistance level? The nearest important level of support is now at around 2,895-2,900. The support level is also at 2,880-2,885. On the other hand, level of resistance is at 2,910-2,915. The futures contract remains close to its local highs this morning, as the 15-minute chart shows:

Nasdaq Also Higher

The technology Nasdaq 100 futures contract follows a similar path, as it fluctuates closer to 7,600 mark. Tech stocks retrace some more of their recent decline, but they remain relatively weaker than the broad stock market following almost 4% downward correction off the August 30th record high of around 7,700. The level of resistance is now at 7,580-7,600. The next resistance level is at 7,630-7,650, among others. On the other hand, support level is at 7,500-7,550. The Nasdaq futures contract trades along its upward trend line, as we can see on the 15-minute chart:

Apple, Amazon - New Uptrend or Just Short-term Bounce?

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). It reached the new record high at the level of $229.67 last week, before reversing lower. Then it broke below its month-long upward trend line. Recently, it bounced off support level of $215-220, marked by the recent consolidation. Will it continue towards new record highs? For now, it looks like an upward correction. The resistance level remains at $225-230:

Now let's take a look at Amazon.com, Inc. stock (AMZN) daily chart. It has reached the new record high at the price of $2,050.50 recently. Since then it was retracing some of this record-breaking rally. The stock broke below the month-long upward trend line. We still can see negative technical divergences. Will Tuesday's intraday reversal lead the market to the record high again? The resistance level remains at $2,000:

Dow Jones Breaks Higher

The Dow Jones Industrial Average broke above its late August local high yesterday, as it got back above 26,000 mark. But will it continue upwards? The nearest important level of resistance is at 26,340-26,440, marked by the late January daily gap down. The index remains above its two-month long upward trend line, as the daily chart shows:

The S&P 500 index reached the new record high at the level of 2,916.50 last month. Then the broad stock market retraced some of its rally and it got back below 2,900 mark. Was it a meaningful downward reversal or just a correction before another leg up? Yesterday's upward breakout may be a new leg within an uptrend. There have been no confirmed negative signals so far. However, we still can see some short-term technical overbought conditions along with negative technical divergences.

Concluding, the S&P 500 index will likely open virtually flat today. We may see some short-term uncertainty, as the market gets closer to its late August record high. There have been no confirmed negative medium-term signals so far.

Intraday trade:

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

Trading position (short-term; our opinion): no short-term positions are justified from the risk/reward perspective.

Thank you.

Paul Rejczak
Stock Trading Strategist
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