Best of the Week
Most Popular
1. Trumponomics Stock Market 2018 - The Manchurian President (1/2) - Nadeem_Walayat
2.Yield Curve Inversion a Remarkably Accurate Warning Indicator For Economic & Market Peril - Dan_Amerman
3.China is Now Officially at War With the US and Japan - Graham_Summers
4.Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18 - Plunger
5.Stock Market Longer-Term Charts Show Incredible Potential - Chris_Vermeulen
6.U.S. Stock Market Cycles Update - Jim_Curry
7.Another Stock Market Drop Next Week? - Brad_Gudgeon
8.The Death of the US Real Estate Dream - Harry_Dent
9.Gold Market Signal vs. Noise - Jordan_Roy_Byrne
10.The Fonzie–Ponzi Theory of Government Debt: An Update - F_F_Wiley
Last 7 days
What the Copper and Gold Crash Means for Commodities and Stocks - 20th Aug 18
Stock Market Challenging Recent High - 19th Aug 18
Venezuela's Great Bolivar Scam, Nothing but a Face Lift - 19th Aug 18
Heavy Truck Sales Sending a Bullish Sign for Stock Market - 19th Aug 18
Why Oil Prices Fell -- Stockpiles or Price Pattern? - 18th Aug 18
Why The Uranium Price Must Go Up - 18th Aug 18
Land Rover Discovery Sport 90% Motorway Driving MPG Fuel Economy in ECO Mode - 18th Aug 18
GDX Gold Mining Stocks Q2’18 Fundamentals - 18th Aug 18
SPX Losing Gains - 17th Aug 18
What Gold Is Not - 17th Aug 18
Dollargeddon - Gold Price to Soar Above $6,000 - 16th Aug 18
Stock Market Higher Again, Correction Over? - 16th Aug 18
Up Your Forex Trading Game - 16th Aug 18
Large Caps Underperformance vs. Small Caps is Bullish for Stocks - 16th Aug 18
“The Big Grab” - Failing Pension and Retirement System - 16th Aug 18
How US Indo-Pacific Vision Forgot Asian Development - 16th Aug 18
Impulse Moves in the Currencies - 15th Aug 19
Best Merlin UK Theme Park Summer Holiday 2018 - Thorpe, Alton Towers, LegoLand or Chessington? - 15th Aug 18
The Essence of Writing an Essay that Must be Understood - 15th Aug 19
Is Solar Energy Rising From The Ashes Again? - 15th Aug 18
A Bullish Bond Argument That Hides in Plain Sight - 15th Aug 18
Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - 15th Aug 19
A Depressed Economy And A Silver Boom - 15th Aug 19
Moving Averages Help You Define Market Trend – Here’s How - 14th Aug 18
It's Time for A New Economic Strategy in Turkey - 14th Aug 18
Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - 14th Aug 18
Dow Stock Market Trend Forecast 2018 - Video - 13th Aug 18
Stock Market Downtrend to Continue? - 13th Aug 18
More Signs That the Stock Market Will Rally Until 2019 - 13th Aug 18
New Stock Market Correction Underway - 13th Aug 18
Talk Cold Turkey Economic Crisis - 13th Aug 18
Which UK Best Theme Park - Alton Towers vs Thorpe Park vs Lego Land vs Chessington World - 12th Aug 18
USD is Rising. What this Means for Currencies and Stocks - 12th Aug 18
Hardest US Housing Market Places to Live - Look Out Middle Class - 12th Aug 18
America’s Suburbs Are Making a Comeback - 12th Aug 18
Stock Market US Presidential Cycle, Seasonal Analysis and Economy - Video - 12th Aug 18

Market Oracle FREE Newsletter

Trading Any Market

Stock Market Higher Again, but Still No Breakout

Stock-Markets / Stock Markets 2018 May 24, 2018 - 03:50 PM GMT

By: Paul_Rejczak

Stock-Markets

Stocks were gaining on Wednesday following lower opening of the trading session. Is this an upward reversal or just another move up within two-week-long consolidation? Bulls are happier today, but there are still two possible medium-term scenarios.

The U.S. stock market indexes gained 0.2-0.6% on Wednesday, as investors' sentiment reversed following a lower open. The S&P 500 index got close to its recent local highs and it currently trades 4.9% below January’s 26th record high of 2,872.87. The Dow Jones Industrial Average gained 0.2%, and the technology Nasdaq Composite gained 0.6%, as it was relatively stronger than the broad stock market yesterday.


The nearest important level of resistance of the S&P 500 index remains at around 2,740-2,750, marked by recent local highs along with mid-March local high. On the other hand, support level is at around 2,720, marked by Monday's daily gap-up of 2,719.50-2,725.70. The support level is also at 2,700-2,710, marked by previous daily gap-up of 2,701.27-2,704.54 and recent daily lows.

The broad stock market extended its short-term uptrend in the beginning of the month, as the S&P 500 index broke above the level of 2,700. Stocks lost some ground a week ago, but it didn't look like a new downtrend. Since then, the market traded within consolidation. So, will the run-up continue towards 2,800? There are still two possible medium-term scenarios - bearish that will lead us below February low following trend line breakdown, and the bullish one in a form of medium-term double top pattern or breakout towards 3,000 mark. There is also a chance that the market will just go sideways for some time, and that would be positive for bulls in the long run (some kind of an extended flat correction):

Mixed Expectations, Uptrend to Continue?

Expectations before the opening of today's trading session are virtually flat, because the index futures contracts trade between -0.1% and +0.1% vs. their Wednesday's closing prices. The European stock market indexes have been mixed so far. Investors will wait for some economic data announcements this morning: Initial Claims at 8:30 a.m., Existing Home Sales at 10:00 a.m. The broad stock market may extend its fluctuations along recent local highs today. If the index breaks above the resistance level of around 2,740, we could see more buying pressure.

The S&P 500 futures contract trades within an intraday uptrend following breakout above yesterday's local high. The nearest important level of resistance is at around 2,735-2,740, marked by recent local highs. Potential resistance level is also at 2,750. On the other hand, support level is at 2,715-2,720. The next level of support remains at 2,700-2,705. The futures contract trades close to its two-day-long upward trend line, as the 15-minute chart shows:

Nasdaq Extends Uptrend

The technology Nasdaq 100 futures contract follows a similar path, as it extends its yesterday's rise. The market sold off towards the level of 6,800 yesterday, before reversing its intraday downtrend and closing slightly above the level of 6,950. Is this a new uptrend? It's still hard to say. Tech stocks retraced their short-term decline, but they remain within consolidation. The nearest important level of resistance is at around 7,000. On the other hand, support level is at 6,900-6,930, among others. The Nasdaq futures contract trades along its recent local highs, as we can see on the 15-minute chart:

Apple, Amazon - Closer to Breakout?

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). It reached new record high two weeks ago, as it extended its short-term uptrend. The price bounced off resistance level of around $190-200 and since then it trades within a consolidation. Is this a topping pattern? There have been no confirmed negative signals so far:

Now let's take a look at Amazon.com, Inc. stock (AMZN) daily chart. The price reached new record high of $1,638.10 in late April and on the same trading day it sold off below $1,600. Was this a downward reversal or just a correction following breakout higher? Since then, the stock traded within a consolidation. Yesterday's price action looked pretty bullish, as price bounced following a lower open:

Dow Jones Continues Sideways

The Dow Jones Industrial Average broke above its medium-term downward trend line recently. Then it continued higher above a few-week-long downward trend line. The blue-chip index bounced off resistance level of 25,000 more than a week ago, and then it retraced its recent advance. Monday's trading session was bullish as Dow Jones broke above its recent local high and closed at 25,000 mark, but it failed to continue higher and went back lower. On Tuesday we saw negative bearish engulfing candlestick pattern, but the market may bounce back following yesterday's intraday reversal:

The broad stock market reversed its intraday decline yesterday, before closing slightly higher. Was it an upward reversal or just another move up within two-week-long consolidation? It's hard to say. If the S&P 500 index breaks above the resistance level of 2,740, we could see continuation higher. There have been no confirmed negative signals so far. However, just like we wrote in our several Stocks Trading Alerts, the early February sell-off sets a negative tone for weeks or months to come.

Concluding, the S&P 500 index will likely open slightly higher today. It is closer to breaking above its short-term consolidation, but we may see some more uncertainty along two-week-long resistance level.

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.

Paul Rejczak Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules