Briefly:

Intraday trade: The S&P 500 index was unchanged on Friday, after opening virtually flat. The broad stock market will probably open virtually flat again 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 main U.S. stock market indexes were virtually flat on Friday, as investors continued to hesitate following the recent advance. 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 0.03% and the technology Nasdaq Composite lost 0.05% on Friday.

The nearest important level of support of the S&P 500 index remains at around 2,895-2,900, marked by Thursday'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 last 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. Then it got back above 2,900 mark. Will it advance towards new all-time highs? The index still trades above its medium-term upward trend line, as we can see on the daily chart:

More Short-term Fluctuations

The expectations before the opening of today's trading session are virtually flat to slightly negative, because the index futures contracts trade between -0.2% and -0.1% vs. their Friday's closing prices. The European stock market indexes have lost 0.2-0.4% so far. Investors will wait for the Empire State Manufacturing Index release at 8:30 a.m. The broad stock market will probably extend its short-term consolidation today. 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, as it extends its Thursday's-Friday's fluctuations.  The nearest important level of resistance remains at around 2,910-2,915, marked by the recent highs, along with the late August record high. On the other hand, the support level is at 2,895-2,900. The support level is also at 2,880-2,885. The futures contract continues to trade along the level of 2,900, as the 15-minute chart shows:

Nasdaq Close to 7,500 Again

The technology Nasdaq 100 futures contract retraced some of its late last week's advance, as it got back closer to 7,500 mark. Tech stocks 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 7,550-7,600. The next resistance level is at 7,630-7,650, among others. On the other hand, support level is at 7,500-7,520. The next level of support is at 7,470, marked by the short-term local low. The Nasdaq futures contract trades within a short-term downward correction, as we can see on the 15-minute chart:

Big Cap Tech Stocks Going Sideways

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 on September the 5th, before reversing lower. Then it broke below its month-long upward trend line. Recently, it bounced off the 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 Above 26,000 Again

The Dow Jones Industrial Average broke above its late August local high on Thursday, 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? Thursday'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. Stocks may extend their short-term fluctuations along the late August record highs. 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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