Stocks Slightly Higher as They Set New Record Highs

By: Paul_Rejczak

Briefly:
Intraday trade: Our Friday's intraday trading outlook was bearish. It proved partly wrong because the S&P 500 index gained just 0.1%, and the index continued to trade within relatively narrow short-term consolidation. The market may retrace some of its recent rally. Therefore, intraday short position is favored again. Stop-loss is at the level of 2,570 and potential profit target is at 2,530 (S&P 500 index).

Our intraday outlook is bearish today. Our short-term outlook is neutral, and our medium-term outlook is neutral:

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

The main U.S. stock market indexes gained 0.1-0.2% on Friday, slightly extending their recent uptrend, as investors' sentiment remained bullish. The S&P 500 index has reached yet another new record high at the level of 2,557.65, before retracing some of its intraday move up. The Dow Jones Industrial Average reached new record high at the level of 22,905.33 on Friday, as it gained around 20 points vs. its Thursday's high. The technology Nasdaq Composite also reached new all-time high at the level of 6616.58. The nearest important level of support of the S&P 500 index remains at around 2,540, marked by recent fluctuations. The next support level is at 2,520-2,530, marked by previous daily gap up of 2,519.44-2,520.40 and short-term local lows. The support level is also at 2,500-2,510, marked by previous level of resistance and local highs. On the other hand, resistance level is at around 2,555, marked by the above-mentioned new all-time high. The S&P 500 index accelerated its uptrend recently. We still can see medium-term negative technical divergences along with technical overbought conditions. However, there have been no confirmed negative signals so far:

Slightly Positive Expectations

Expectations before the opening of today's trading session are slightly positive, with index futures currently between 0.0% and +0.2% vs. their Friday's closing prices. The European stock market indexes have gained 0.1-0.2% so far. Investors will now wait for the Empire State Manufacturing Index release at 8:30 a.m. The market expects that it was at 20.3 in October. Investors will also wait for quarterly corporate earnings releases. The S&P 500 futures contract trades within an intraday consolidation, following an overnight move up. The nearest important resistance level is at around 2,555, marked by new record high. On the other hand, the nearest important support level is at 2,550. The next level of support is at 2,540-2,545, marked by previous resistance level and some local lows. The support level is also at 2,530, marked by short-term consolidation. The futures contract is trading above its two-day-long upward trend line, as we can see on the 15-minute chart:

Tech Stocks Reach New Record High

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday consolidation along new record high. It broke above the resistance level of 6,100 this morning. The nearest important support level is now at around 6,080-6,100, and the next support level remains at around 6,040-6,060, marked by short-term consolidation. The Nasdaq 100 futures contract trades along new record high, as the 15-minute chart shows:

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com) again. It remains relatively weaker than record-breaking broad stock market indexes. The stock price bounced off support level at around $150 at the end of September. It retraced some of its early September decline. Is this a new uptrend or just upward correction? We can see some potential negative rising wedge - bear flag pattern. Will it break lower?

The Dow Jones Industrial Average daily chart (chart courtesy of http://stockcharts.com) shows that blue-chip index trades along new record highs, as it gets closer to 23,000 mark. There have been no confirmed negative signals so far. However, we still can see negative technical divergences. The price continues higher, while technical indicator like RSI (Relative Strength Index) forms a lower high or remains at the same level. It shows us that even though price reaches new highs, the fuel for the uptrend starts running low. Bearish divergence is a moderately useful tool for detecting a coming reversal in the bullish trend, therefore it needs a confirmation. We can see relatively steep month-long upward trading channel or a negative rising wedge pattern. Is this a topping pattern?

Concluding, the S&P 500 index slightly extended its uptrend on Friday, as it gained 0.1%. The market reached new record high above 2,550 mark. Will uptrend continue even further? Or is this some topping pattern before downward correction? There have been no confirmed negative signals so far. However, we can see technical overbought conditions, along with very bullish investors' sentiment. The broad stock market may retrace some of its recent advance at some point.

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.