Uncertainty At Record Highs, Will Stocks Continue Higher?

By: Paul_Rejczak

Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook remains neutral, following S&P 500 index breakout above last year's all-time high:

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

The U.S. stock market indexes were mixed between 0.0% and +0.3% on Wednesday, extending their short-term fluctuations following recent move up, as investors' sentiment remained bullish. The S&P 500 index has reached new all-time high at the level of 2,484.04 on Thursday, before reversing slightly lower. It continued to fluctuate on Wednesday, as it remained just 0.3% below new record high. The Dow Jones Industrial Average reached new record high at the level of 22,036.1 yesterday, as it was relatively stronger than the broad stock market, following better-than-expected quarterly earnings release from Apple. The technology Nasdaq Composite was unchanged, as investors reacted to quarterly corporate earnings releases. The nearest important support level of the S&P 500 index is at around 2,460-2,465, marked by July 19 daily gap up of 2,460.92-2,463.85. The next level of support is at 2,450-2,455, marked by June 19 local high. The support level is also at 2,430-2,435, marked by July 12 daily gap up of 2,429.30-2,435.75. On the other hand, level of resistance is at 2,480-2,485, marked by new all-time high. The next resistance level is at 2,500 mark. There have been no confirmed negative signals so far. However, we can see overbought conditions and negative technical divergences. The S&P 500 index broke above its over month-long consolidation, as we can see on the daily chart:

Mixed Expectations

Expectations before the opening of today's trading session are virtually flat, with index futures currently between 0.0% and +0.1% vs. their yesterday's closing prices. The European stock market indexes have been mixed so far. Investors will now wait for some economic data announcements: Initial Claims at 8:30 a.m., Factory Orders, ISM Services number at 10:00 a.m. The market expects that ISM Services number was at 56.9 in July. Investors will also wait for more quarterly corporate earnings releases. The S&P 500 futures contract trades within an intraday consolidation, as it extends its short-term fluctuations. The market trades within an over-week-long consolidation along new record high, close to the level of 2,480. The nearest important resistance level is at around 2,480-2,500. On the other hand, support level is at 2,450-2,460, marked by some short-term local lows. The next support level remains at 2,440, among others. Will the market extend its uptrend? Or is this a topping pattern before downward reversal?

Nasdaq Fluctuates

The technology Nasdaq 100 futures contract trades within a similar intraday consolidation, as it extends its week-long fluctuations along new record high. The market retraced some of its recent rally on Thursday, as it bounced off 6,000 mark. The nearest important level of resistance is at around 5,950-6,000. On the other hand, support level is at 5,850-5,870, marked by short-term local lows, as the 15-minute chart shows:

Concluding, the S&P 500 index remained unchanged on Wednesday, as investors continued to take profits following recent move up. Will bull market extend? Or is this some topping pattern before downward reversal? There have been no confirmed negative signals so far. However, we still can see negative technical divergences, along with medium-term overbought conditions.

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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.

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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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