Briefly:
Intraday trade: The S&P 500 index gained 0.6% after opening 0.1% higher on Thursday. The broad stock market will likely open higher again. The market may extend its short-term uptrend. However, investors will wait for the important monthly jobs data release.
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 gained 0.5-0.7% on Thursday, extending their short-term run-up again, as investors' sentiment further improved despite the ongoing trade war fears. The S&P 500 index traded over 120 points above its Monday's local low yesterday. It is currently 3.8% below its May the 1st record high of 2,954.13. The Dow Jones Industrial Average gained 0.7% and the Nasdaq Composite gained 0.5% on Thursday.
The nearest important resistance level of the S&P 500 index is now at 2,850, marked by the local high. The next resistance level is at 2,865-2,870, marked by the previous local highs. On the other hand, the support level is now at 2,800-2,820, among others.
The broad stock market broke above the last year's high in the early May. But then the S&P 500 index retraced all of the April's advance. The market also broke below its two-month-long upward trend in the early May. And now it is trading above the month-long downward trend line:
Positive Expectations Again
Expectations before the opening of today's trading session are positive, because the index futures contracts trade 0.3-0.4% above their yesterday's closing prices. The European stock market indexes have gained 0.9-1.5% so far. Investors will wait for the important economic data announcements today: Non-Farm Payrolls number, Unemployment Rate at 8:30 a.m., Wholesale Inventories at 10:00 a.m.
The broad stock market will likely extend its short-term uptrend this morning. However, the sentiment may change following the mentioned monthly jobs data release. The S&P 500 broke above its recent local highs, but it is still below the resistance level, marked by its mid-May local highs.
The S&P 500 futures contract trades within an intraday uptrend, as it extends its recent advance. The nearest important resistance level is at around 2,880-2,900, marked by the previous local highs. On the other hand, the support level is at 2,820-2,830, among others. The futures contract is now above the previous local highs, as the 15-minute chart shows:
Nasdaq Also Higher
The technology Nasdaq 100 futures contract follows a similar path, as it trades at a new local high. The market broke above the resistance level of 7,250-7,300. The next resistance level is at 7,350-7,400. The Nasdaq futures contract gets closer to the previous consolidation, as we can see on the 15-minute chart:
Microsoft Closer to All-Time High
Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock extended its rally on May the 1st following the quarterly earnings release. Then the price reversed the upward course and broke below the medium-term upward trend line. Since then it was trading within a downtrend. And on Tuesday the stock broke above its downward trend line. The nearest important resistance level is at $185-190:
Now let's take a look at the daily chart of Microsoft Corp. (MSFT). The stock accelerated its uptrend in late April, as it reached the new record high of $131.37. Since then, the market was trading within a consolidation. On Monday it broke below the support level, but then it got back higher. It gets closer to the record high again:
Dow Jones Closer to 26,000 Again
The Dow Jones Industrial Average has been relatively weaker than the broad stock market since February. The resistance level remained at around 26,800-27,000, marked by the last year's topping pattern and the record high of 26,951.8. Last week the blue-chip stocks' gauge followed the broad stock market, as it accelerated the downtrend. The market broke below its important 200-day moving average. On Tuesday it came back above the 25,000 mark, and on Wednesday it got back above the 200-day moving average. The resistance level is now at around 25,800-26,000, marked by the previous local highs:
The S&P 500 index accelerated its short-term downtrend on Monday, as it fell to the local low of around 2,729. On Tuesday it came back higher and it closed above the 2,800 mark, and since then it was extending the short-term uptrend. So was it an important upward reversal or just an upward correction? The market broke above the month-long downward trend line.
Concluding, the S&P 500 index will likely open higher today. The market may retrace more of its recent sell-off. However, investors will wait for the important economic data release at 8:30 a.m..
Trading position (short-term; our opinion): no positions are justified from the risk/reward perspective.
Thank you.
Paul Rejczak
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care
