Briefly:

Intraday trade: The S&P 500 index lost 0.4% on Thursday, after opening virtually flat. The broad stock market will probably slightly lower today. We may see more short-term fluctuations along the support level of the late August daily gap up. 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 were mixed between -0.9% and +0.1% on Thursday, slightly extending their short-term downtrend, as investors continued taking profits off the table following the recent rally. The S&P 500 index has reached the record high of 2,916.50 last week. It currently trades1.3%  below that high. The Dow Jones Industrial Average gained 0.1% and the technology Nasdaq Composite lost 0.9% yesterday.

The nearest important level of support of the S&P 500 index is still at around 2,875, marked by last week's Monday's daily gap up of 2,876.16-2,884.69. The support level is also at 2,860-2,865. On the other hand, the nearest important level of resistance is at 2,900. The next resistance level is at 2,910-2,915, marked by the mentioned last Wednesday's record high.

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

Short-term Consolidation, the Bottom or Just Pause Before Another Leg Down?

The index futures contracts trade 0.1-0.2% below their Wednesday's closing prices this morning. So, expectations before the opening of today's trading session are slightly negative. The European stock market indexes have lost 0.2-0.8% so far. Investors will wait for the important monthly jobs data release: Nonfarm Payrolls, Unemployment Rate at 8:30 a.m. The broad stock market will probably extend its short-term uncertainty following the recent decline. For now, it trades above the support level of the mentioned last week's Monday's daily gap up. There have been no confirmed negative signals so far. However, if the index breaks lower, we could see more selling pressure.

The S&P 500 futures contract trades within an intraday consolidation following its yesterday's intraday decline. The nearest important level of resistance is now at around 2,875-2,880, marked by the local highs. The next resistance level is at 2,895-2,900. On the other hand, the support level is at 2,865-2,870, among others. The futures contract extended its short-term downtrend yesterday, as the 15-minute chart shows:

Nasdaq Relatively Much Weaker

The technology Nasdaq 100 futures contract remained relatively much weaker than the broad stock market, as extended its downtrend to around 7,400 yesterday. It has already fallen 3.8% off its August 30th record high of around 7,700. The nearest important support level is now at 7,400-7,420. On the other hand, the level of resistance is at 7,460-7,500, among others. The Nasdaq futures contract trades below its short-term downward trend line, as we can see on the 15-minute chart:

Big Cap Tech Stocks Leading Lower

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 Wednesday before reversing its intraday uptrend and closing lower. Then it broke below its month-long upward trend line yesterday. The nearest important level of support is at $215-220, marked by the recent consolidation. It looks like a short-term downward reversal:

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 on Tuesday. Since then it is retracing its recent rally. The stock broke below the month-long upward trend line yesterday. We still can see negative technical divergences. It looks like a topping pattern:

Dow Jones Goes Sideways

The Dow Jones Industrial Average continues to fluctuate following its recent advance. The blue-chip stocks' gauge trades along the level of 26,000. But it is still way below its 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 last week. Then the broad stock market retraced some of its recent rally, as the index got back below 2,900 mark. Was it a meaningful downward reversal or just correction before another leg up? There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions along with negative technical divergences.

Concluding, the S&P 500 index will likely open slightly lower to virtually flat today. Then it may continue to fluctuate above the mentioned last week's daily gap up and below the level of 2,900. For now, it looks like a downward correction within an uptrend from the August local low of around 2,800. Investors will wait for the important monthly jobs data release today.

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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