Briefly:

Intraday trade: The S&P 500 index gained 0.4% on Tuesday, after opening 0.2% lower. The broad stock market will probably open virtually flat to slightly higher today. We may see more short-term fluctuations along the support level of the late January high. 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 0.4-0.8% on Tuesday, as they retraced some of their recent decline. The S&P 500 index has reached the record high of 2,916.50 on August the 29th. It currently trades 0.9% below that high. The Dow Jones Industrial Average gained 0.4% and the technology Nasdaq Composite gained 0.6% yesterday.

The nearest important level of support of the S&P 500 index remains at around 2,860-2,865, marked by the recent fluctuations. The support level is also at 2,830-2,835. On the other hand, the nearest important level of resistance is at 2,885-2,890, marked by the previous support level and the recent local highs, among others. The next resistance level is at 2,900. The resistance level is also at 2,910-2,915, marked by the mentioned late August 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 correction. The market retraced its late August advance, and it got back down to the support level of its late January high. Will it continue lower or reverse higher towards the all-time high? For now, it looks like a correction within an uptrend. The index continues to trade above its medium-term upward trend line, as we can see on the daily chart:

Higher, but Still Below 2,900 Mark

The expectations before the opening of today's trading session are slightly positive, because the index futures contracts trade between 0.0% and +0.2% vs. their Tuesday's closing prices. The European stock market indexes have gained 0.2-0.6% so far. Investors will now wait for some economic data announcements today: Producer Price Index at 8:30 a.m., Crude Oil Inventories at 10:30 a.m., Beige Book release at 2:00 p.m. The broad stock market will probably continue to fluctuate following its late August rally. Yesterday's advance brought the S&P 500 index back to the resistance level of 2,900. For now it looks like a consolidation. There have been no confirmed negative medium-term signals so far.

The S&P 500 futures contract trades within an intraday uptrend, as it slightly extends its yesterday's advance. The market is the highest since last Thursday. But will it continue higher above the resistance level of around 2,900? The nearest important level of support remains at 2,880-2,885. The support level is also at 2,865-2,870, marked by the short-term local lows. The futures contract broke above its recent trading range, as the 15-minute chart shows:

Nasdaq Above 7,500 Again

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday uptrend. Tech stocks retrace some 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 at 7,550, marked by the recent local high. On the other hand, the support level is now at 7,480-7,500, marked by the previous level of resistance. The support level is also at 7,400-7,420. The Nasdaq futures contract retraced some of its recent decline, as we can see on the 15-minute chart:

Apple, Amazon Reversing Higher

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 a week ago, before reversing lower. Then it broke below its month-long upward trend line. The nearest important level of support is at $215-220, marked by the recent consolidation. The stock bounced off that support level yesterday. For now, it looks like an upward correction within a downtrend:

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 yesterday's intraday reversal lead the market to the record high again? The resistance level is at $2,000:

Dow Jones Still Close to 26,000

The Dow Jones Industrial Average continues to fluctuate following its August advance. The blue-chip stocks' gauge trades along the level of 26,000. But it is still way below the late January record high of 26,616.71. 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 in the late August. Since 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? There have been no confirmed negative signals so far. However, we can see some short-term technical overbought conditions along with negative technical divergences.

Concluding, the S&P 500 index will likely open virtually flat to slightly higher today. Then it may fluctuate along the short-term resistance level of 2,900. If it breaks higher, we could see more buying pressure. 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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