S&P500 Stuck at 2900, Still No Clear Direction

Stocks continued to fluctuate on Friday, as investors awaited this week’s Wednesday’s Fed Rate Decision release. The S&P 500 index reached the new local high on Tuesday and then it came back below the 2,900 mark. So was it a downward reversal or just correction before another leg up?

The U.S. stock market indexes lost 0.1-0.5% on Friday, as they extended their short-term consolidation. The S&P 500 index gained more than 180 points from its previous week’s Monday’s local low recently. It is currently 2.3% below its May the 1st record high of 2,954.13. The Dow Jones Industrial Average lost 0.1% and the Nasdaq Composite lost 0.5% on Friday.

The nearest important resistance level of the S&P 500 index remains at 2,900-2,910. The resistance level is also at 2,930-2,950. On the other hand, the support level is at 2,875-2,880. The next support level remains at 2,830-2,850.

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 then it got back higher following breaking above the month-long downward trend line:

More Short-Term Uncertainty

The index futures contracts trade between -0.05% and +0.05% vs. their Friday’s closing prices, so the expectations before the opening of today’s trading session are virtually flat. The European stock market indexes have been mixed so far. Investors will wait for some economic data announcements today: Empire State Manufacturing Index, NAHB Housing Market Index at 10:00 a.m.

The broad stock market will likely further extend its short-term fluctuations following last week’s rally. The S&P 500 index may fluctuate below the mentioned resistance level of 2,900.

The S&P 500 futures contract trades within an intraday consolidation following an overnight decline. The market remains below the resistance level of around 2,890-2,900. On the other hand, the support level is at 2,865-2,875. The futures contract remains slightly above its short-term upward trend line, as the 15-minute chart shows:

Nasdaq Still at 7,500

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation. The market extended its rally a week ago, following breaking above the resistance level of 7,250-7,300. Then it broke above the 7,500 mark and entered a short-term consolidation. It got close to the 7,600 mark on Tuesday, before reversing downwards. The nearest important resistance level remains at 7,550-7,600. The Nasdaq futures continues to trade along the 7,500 mark this morning, as we can see on the 15-minute chart:

Apple, Microsoft Going Sideways

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock got back to the resistance level of around $200, following breaking above the downward trend line in the early June. For now, it looks like an upward correction. However, if the stock gets back above $200, we could see more buying pressure:

Now let's take a look at the daily chart of Microsoft Corp. (MSFT). The stock accelerated its uptrend in late April. Since then, the market was trading within a consolidation. In the early June it broke below the support level, but then it got back higher. It reached the new record high of $134.24 on Tuesday a week ago, before reversing its intraday uptrend once again:

Dow Jones Remains at 26,000

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. Recently 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, but then it got back higher. For now, it looks like a flat correction within an uptrend:

Nikkei Also Going Sideways

Let's take a look at the Japanese Nikkei 225 index. It retraced some more of its recent decline last week. However, the market remains close to the 21,000 mark. The index continues to trade along its previous local lows:

The S&P 500 index traded within a short-term consolidation last week, as investors took short-term profits off the table following the early June rally. Will the broad stock market get back to the record high? There have been no confirmed negative signals so far.

Concluding, the S&P 500 index will likely open virtually flat today. Then we could see more short-term fluctuations ahead of this week’s important economic data releases.

Paul Rejczak

Stock Trading Strategist

Sunshine Profits - Effective Investments through Diligence and Care

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Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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