Stocks Extend Their Fluctuations - Which Direction Is Next?

By: Paul_Rejczak

Briefly:
Intraday trade: Our Friday's neutral intraday outlook has proved accurate. The S&P 500 index extended its short-term consolidation. The market may continue to fluctuate today. There have been no confirmed positive signals so far. On the other hand, the S&P 500 index remains above support level marked by last week's Tuesday's daily gap up of 2,430.58-2,433.67, and there is no clear short-term downtrend. Therefore, we prefer to be out of the market today, avoiding low risk/reward ratio trades.

Our intraday outlook remains neutral, and our short-term outlook is bearish, as we expect downward correction. Our medium-term outlook remains bearish:

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

The U.S. stock market indexes were mixed between -0.1% and +0.2% on Friday, extending their recent fluctuations, as investors reacted to economic data announcements, Jackson Hole Economic Policy Symposium speeches. The S&P 500 index remained within a relatively narrow trading range, as it traded along the level of 2,450. It is currently 1.9% below the August 8 all-time high of 2,490.87. The Dow Jones Industrial Average remains close to 21,800 mark, and the technology Nasdaq Composite trades 3.0% below its record high of 6,460.84. The nearest important level of resistance of the S&P 500 index remains at 2,450-2,455, marked by last week's Tuesday's local high. The next resistance level is at 2,465-2,475, marked by previous support level and local highs. The resistance level is also at 2,490-2,500, marked by the above-mentioned all-time high. On the other hand, support level is at 2.430-2,435, marked by Tuesday's daily gap up of 2,430.58-2,433.67. The next support level remains at 2,400-2,420. The market retraced some of its recent downtrend on Tuesday, but then it failed to extend its short-term uptrend. There have been no confirmed positive signals so far. We still can see some negative technical divergences. But will they lead to medium-term downward correction? The S&P 500 index continues to trade within a medium-term consolidation following early June breakout above 2,400 mark, as we can see on the daily chart:

More Fluctuations?

Expectations before the opening of today's trading session are virtually flat, with index futures currently down 0.1% vs. their Friday's closing prices. The European stock market indexes have lost 0.1-0.5% so far. Investors will now wait for the Wholesale Inventories number release at 8:30 a.m. The market expects that it grew 0.8% in July. The S&P 500 futures contract trades within an intraday uptrend following an overnight move down. The nearest important level of resistance is at around 2,445-2,450, marked by short-term local highs. The next resistance level is at around 2,455, marked by last Tuesday's local highs. On the other hand, support level is at 2,430-2,435, marked by previous level of resistance and some local lows. Will the market continue its last week's Tuesday's rally?

Nasdaq Relatively Weaker

The technology Nasdaq 100 futures contract trades within an intraday uptrend, as it retraces an overnight move down. The nearest important level of resistance remains at 5,830-5,840, marked by some short-term local highs. The next level of resistance is at 5,850-5,870, among others. On the other hand, support level is at 5,800, marked by local lows. The market trades within a short-term consolidation following last week's Tuesday's rally, as the 15-minute chart shows:

Concluding, the S&P 500 index remained within short-term consolidation on Friday, following Tuesday's rally. Is this a new uptrend or just more consolidation after November-August move up? There have been no confirmed short-term positive signals so far. We still can see some medium-term overbought conditions along with negative technical divergences.

If you enjoyed the above analysis and would like to receive free follow-ups, we encourage you to sign up for our daily newsletter – it’s free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to our premium daily Gold & Silver Trading Alerts. Sign up now.

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts
SunshineProfits.com

Stock market strategist, who has been known for quality of his technical and fundamental analysis since the late nineties. He is interested in forecasting market behavior based on both traditional and innovative methods of technical analysis. Paul has made his name by developing mechanical trading systems. Paul is the author of Sunshine Profits’ premium service for stock traders: Stock Trading Alerts.

* * * * *

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.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.