S&P 500 Pulling Back From New Record, Reversal?

The U.S. stock market indexes lost 0.1% on Friday, following an intraday advance. The S&P 500 index reached the new record high of 2,964.15, but then it came back to the 2,950 mark again. The index gained more than 230 points from its early June local low of around 2,729. Both the Dow Jones Industrial Average and the Nasdaq Composite lost 0.1% on Friday.

The nearest important resistance level of the S&P 500 index is now at 2,960-2,965, marked by the mentioned new record high. On the other hand, the support level is at 2,950. The next support level remains at 2,930-2,935, marked by the recent consolidation.

The broad stock market broke above the last years high in the early May. But then the S&P 500 index retraced all of the Aprils advance. The market also broke below its two-month-long upward trend line in the early May. And then it got back higher following breaking above the month-long downward trend line. On Friday the broad stock market reached the new record high. However, it remains close to the previous medium-term highs:

Close to Fridays Record High

The index futures contracts trade between +0.1% and +0.2% vs. their Fridays closing prices, so the expectations before the opening of todays trading session are slightly positive. The European stock market indexes have been mixed so far. There will be no new important economic data announcements today.

The broad stock market will likely fluctuate following last weeks rally and the Fridays record-breaking intraday advance. We may see an attempt at getting back to the all-time high. However, there may be another short-term profit-taking action at some point.

The S&P 500 futures contract trades within an intraday consolidation, as it remains slighlty below the new record high. The nearest important resistance level is at 2,960-2,970. On the other hand, the support level is now at 2,945-2,950, among others. The futures contract is now below the recent upward trend line, as the 15-minute chart shows:

Nasdaq Slightly Below 7,800 Mark

The technology Nasdaq 100 futures contract follows a similar path this morning, as it trades within an intraday consolidation. The nearest important resistance level is at 7,800. On the other hand, the support level is at 7,650-7,700, marked by the recent resistance level. The Nasdaq futures contract remains below the 7,800 level, as we can see on the 15-minute chart:

Big Cap Tech Stocks Short-Term Pause or Some Topping Pattern?

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). The stock is now close to the resistance level of $200, following breaking above the downward trend line in the early June. It still looks like an upward correction:

Now let's take a look at the daily chart of Microsoft Corp. (MSFT). The stock reached the new record high of $137.73 on Friday. It broke above the short-term consolidation last week. But will it continue upwards? We could see another profit-taking action at some point. The resistance level is at around $140, marked by the previous medium-term upward trend line:

Dow Jones Closer to Last Years Record High

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 years topping pattern and the record high of 26,951.8. On Friday the index reached the new medium-term high, following breaking above its late April consolidation. However, it remains below the last years all-time high:

Nikkei Going Sideways

Let's take a look at the Japanese Nikkei 225 index. It retraced more of its recent decline last week. But the market continues to trade along the previous local lows and the medium-term consolidation:

The S&P 500 index reached the new record high on Friday, before reversing its upward course and closing slightly lower. So was it a downward reversal or just a quick profit-taking action before another leg higher? We could see some more volatility following the recent advances.

Concluding, the S&P 500 index will likely open slightly higher today. Then we may see some more short-term consolidation along the previous medium-term highs and the new record high.

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care

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