Briefly: In our opinion, no speculative positions are justified.

Our intraday outlook is now neutral, and our short-term outlook is neutral. Our medium-term outlook remains neutral, following S&P 500 index breakout above last year's all-time high:

Intraday outlook (next 24 hours): neutral
Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): neutral

The U.S. stock market indexes were mixed between 0.0% and +0.2% on Friday, as investors took some short-term profits off the table following recent rally, ahead of long holiday weekend. The S&P 500 index remained close to its Thursday's new record high of 2,418.71. It has broken above the May 16 high of 2,405.77 on Thursday, retracing previous week's Wednesday's sell-off. The Dow Jones Industrial Average remained above the level of 21,000, however, it continued to trade below the March 1 all-time high. The technology Nasdaq Composite continued to trade above the level of 6,200 on Friday, along Thursday's new all-time high. The nearest important resistance level of the S&P 500 index is at around 2,415-2,420, marked by new record high. On the other hand, support level is currently at around 2,400-2,410, marked by previous level of resistance, along with last Thursday's daily gap up of 2,405.58-2,408.01. The next level of support remains at 2,390-2,395, marked by some short-term local lows. The support level is also at 2,385, marked by local low. Will the uptrend continue towards 2,500 mark? There have been no confirmed negative signals so far. However, we can see some overbought conditions and negative technical divergences. The S&P 500 index continues to trade slightly below its November-April upward trend line, as we can see on the daily chart:

Expectations before the opening of today's trading session are virtually flat, with index futures currently down 0.1%. Investors continue to take short-term profits off the table following recent rally. The European stock market indexes have lost 0.2-0.6% so far. Investors will now wait for some important economic data announcements: Personal Income, Personal Spending at 8:30 a.m., Consumer Confidence number at 10:00 a.m. The market expects that Personal Income and Personal Spending grew 0.4% in April, and Consumer Confidence was at 120.1 in May. The S&P 500 futures contract trades within an intraday consolidation, following an overnight move down. It is currently trading just 0.3-0.4% below new record high above the level of 2,417. The nearest important level of resistance is at around 2,415-2,420, marked by that new all-time high. On the other hand, support level is at 2,400-2,405, marked by previous level of resistance. The next important level of support is at 2,390-2,395, marked by recent fluctuations. The market trades within a relatively flat correction following recent rally reaching new all-time high. There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions, along with negative technical divergences:

The technology Nasdaq 100 futures contract follows a similar path, as it currently trades within an intraday consolidation slightly below new record high along the level of 5,800. The nearest important level of resistance is at around 5,800-5,805. On the other hand, support level is at 5,770-5,780, marked by short-term consolidation. The next level of support is at around 5,740-5,760, marked by some previous fluctuations, as the 15-minute chart shows:

Concluding, the S&P 500 index broke above its mid-May high on Thursday last week, as the broad stock market gauge extended week-long rally off previous week's sell-off lows along the level of 2,350. It continued over eight-year-long bull market. The index broke above three-month-long medium-term consolidation along the level of 2,400. But will the uptrend accelerate? Or is this some topping pattern before downward reversal? We still can see some negative medium-term technical divergences. However, there have been no confirmed negative signals so far.

Our speculative short position (opened on February 15 at 2,335.58 - opening price of the S&P 500 index) has been closed on Thursday, at the stop-loss level of 2,410 - S&P 500 index, as the S&P 500 futures contract broke above the level of 2,407. We lost 74.42 index points on that trade, betting against over year-long medium-term uptrend off last year's February local low. It is always important to set some exit price level in case some events cause the price to move in the unlikely direction. Having safety measures in place helps limit potential losses while letting the gains grow. Currently, we prefer to be out of the market, avoiding low risk/reward ratio trades. We will let you know when we think it is safe to get back in the market.

To summarize: no speculative positions are justified from the risk/reward perspective at this moment.

Thank you.

Paul Rejczak
Stock Trading Strategist
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