Briefly:

Intraday trade: The S&P 500 index gained 0.1% on Monday, after opening 0.1% lower. The broad stock market will probably open slightly lower today. We may see some more short-term fluctuations following the recent 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 U.S. stock market indexes were mixed between -0.1% and +0.3% on Friday, as investors continued taking some short-term profits off the table following the recent advance. The S&P 500 index has reached the record high of 2,916.50 on Wednesday. It currently trades close to 2,900 mark. The Dow Jones Industrial Average lost 0.1% and the technology Nasdaq Composite gained 0.3% on Friday.

The nearest important level of support of the S&P 500 index remains at around 2,900, marked by the previous short-term resistance level. The next support level is at 2,875-2,885, marked by last 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 resistance level is at 2,910-2,915, marked by 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. We may see more upward price action in the near term, but some downward correction may be coming. The market has retraced its late January - early February downward correction recently. So will it continue towards 3,000 mark? The index still trades above its medium-term upward trend line, as we can see on the daily chart:

Slightly Negative Expectations

The index futures contracts trade 0.2% below their Friday's closing prices. So, expectations before the opening of today's trading session are slightly negative. The European stock market indexes have lost 0.3-1.0% so far. Investors will wait for some economic data announcements: ISM Manufacturing PMI, Construction Spending at 10:00 a.m. The broad stock market will probably extend its short-term consolidation today. There have been no confirmed negative signals so far. However, we can see technical overbought conditions.

The S&P 500 futures contract trades within an intraday downtrend, as it retraces its overnight advance. The nearest important level of resistance remains at around 2,910-2,915, marked by the new record high. On the other hand, the support level is at 2,890-2,895, among others. The futures contract continues to trade close to the level of 2,900, as we can see on the 15-minute chart:

Nasdaq Also Lower

The technology Nasdaq 100 futures contract follows a similar path, as it retraces its overnight advance. It remains relatively close to the new record high just below the level of 7,700. The nearest important resistance level is at around 7,680-7,700, marked by the new record high. On the other hand, the support level is at 7,600-7,620, marked by the previous level of resistance. The Nasdaq futures contract extends its short-term consolidation, as the 15-minute chart shows:

Apple Reached Another New Record High, but Correction Looms

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). It reached the new record high on Friday at the level of $228.87. Then it reversed its intraday uptrend again and retraced some of the run-up. There have been no confirmed negative signals so far. However, we may see a downward correction at some point. The nearest important level of support is now at $215-220, marked by the recent consolidation. The price remains above its month-long upward trend line:

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 $2,025.57 on Thursday. The stock accelerated its uptrend above its month-long upward trend line recently. We still can see some negative technical divergences. However, there have been no confirmed negative signals so far:

Dow Jones Remains Relatively Weaker

The Dow Jones Industrial Average reached new local highs after breaking above its previous high recently. But the blue-chip stocks' gauge got back below the level of 26,000 on Thursday. And it continues to trade 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. Will the uptrend continue towards 3,000 mark? 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 today. Then it may continue to fluctuate following the recent rally. If the index breaks below 2,900 mark, we could see more selling pressure.

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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