Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Pre-COVID US Economy Wasn’t All That Great Either - 4th Dec 20
Bitcoin Breath Taking Surge - Crypto Trading Event - 4th Dec 20
Platinum Begins A New Rally – Gold & Silver Will Follow - 4th Dec 20
Don't Let the Silver (and Gold) Bull Shake You Off! - 4th Dec 20
Stronger Risk Appetite Sends Gold below $1,800 - 4th Dec 20
A new “miracle compound” is set to take over the biotech market - 4th Dec 20
Eiro-group Review –The power of trading education - 4th Dec 20
Early Investors set to win big as FDA fast-tracks this ancient medicine - 3rd Dec 20
New PC System Switch On, Where's Windows 10 Licence Key? Overclockers UK OEM Review (5) - 3rd Dec 20
Poundland Budget Christmas Decorations Shopping 2020 to Beat the Corona Economic Depression - 3rd Dec 20
What is the right type of insurance for you, and how do you find it? - 3rd Dec 20
What Are the 3 Stocks That Will Benefit from Covid-19? - 3rd Dec 20
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Stock Market Topping Pattern or Just Consolidation?

Stock-Markets / Stock Markets 2018 Jun 11, 2018 - 06:47 PM GMT

By: Paul_Rejczak

Stock-Markets

Stocks traded within a short-term consolidation on Friday, as investors took some profits off the table following the recent advance. The broad stock market accelerated its uptrend after breaking above three-week-long consolidation a week ago. Will it continue its uptrend or is this some topping pattern ahead of downward reversal? There are still two possible medium-term scenarios.

The U.S. stock market indexes gained 0.1-0.3% on Friday, as they fluctuated following the recent advance. The S&P 500 index remained close to its mid-March local high of around 2,800. It currently trades 3.9% below January's 26th record high of 2,872.87. The Dow Jones Industrial Average gained 0.3%, and the technology Nasdaq Composite gained 0.1%, as it was relatively weaker than the broad stock market on Friday.


The nearest important level of resistance of the S&P 500 index is at around 2,780-2,800, marked by mid-March local high. The next resistance level is at 2,830-2,840, marked by the late January short-term consolidation. On the other hand, support level is at 2,760-2,765, marked by recent local lows. The next level of support is at 2,750, marked by previous level of resistance. The support level is also at 2,735-2,740, marked by last Monday's daily gap-up of 2,736.93-2,740.54.

The broad stock market accelerated its short-term uptrend recently following the S&P 500 index' breakout above the resistance level of 2,750. Will it continue higher despite short-term overbought conditions? We may see some more uncertainty and profit taking action. 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):

Virtually Flat Expectations, S&P 500 at Resistance Level

The index futures contracts trade between -0.05% and +0.05% vs. their Friday's closing prices this morning. So, expectations before the opening of today's trading session are virtually flat. The main European stock market indexes have gained 0.2-0.8% so far. There will be no new important economic data announcements today. The broad stock market will likely continue to fluctuate within a short-term consolidation. The S&P 500 index remains below the resistance level of 2,800, but we may see an attempt at breaking higher. There have been no confirmed negative signals so far.

The S&P 500 futures contract trades within an intraday uptrend, as it slightly extends its last week's move up. The nearest important level of support is at around 2,770, marked by some recent fluctuations. The next support level remains at 2,750-2,760. On the other hand, level of resistance is at 2,780, and the next resistance level is at 2,800. The futures contract trades along its resistance level, as we can see on the 15-minute chart:

Nasdaq Relatively Weaker

The technology Nasdaq 100 futures contract extends its short-term consolidation following Thursday's-Friday's downward correction of its recent rally. The market reached new all-time high on Thursday, slightly above its mid-March top. Then it quickly reversed lower. The Nasdaq 100 fell more than 150 points off Thursday's daily high. So, volatility is back. The nearest important level of resistance is now at around 7160, marked by the local highs. The resistance level is also at 7,200-7,230. On the other hand support level is at 7,100-7,120, and the next level of support is at 7,050-7,080. The Nasdaq futures contract extends its short-term consolidation, as the 15-minute chart shows:

Apple, Amazon - Downward Correction

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). It reached new record high on Thursday, as it slightly extended its short-term uptrend following last Monday's breakout above $190. Then the stock retraced some of its advance on Friday, as it fell closer to $190 again. Investors' sentiment remains bullish, but will the uptrend continue? There have been no confirmed negative signals so far. For now, it looks like a short-term consolidation:

Now let's take a look at Amazon.com, Inc. stock (AMZN) daily chart. It accelerated its uptrend last week, as it reached new record high above $1,700. The stock retraced some of this rally recently. Is this a downward reversal or just a quick downward correction? For now, it looks like a downward correction. The resistance level remains at around $1,700:

Dow Jones Still Relatively Strong

The Dow Jones Industrial Average broke above its medium-term downward trend line in the first half of May. Then it continued higher above a few-week-long downward trend line. However, it kept bouncing off resistance level of 25,000. In the second half of May blue-chip stocks were relatively weaker than the broad stock market, as Dow Jones fell below 24,500 again. On Wednesday, we wrote that "the market is taking an attempt at breaking higher". And it did break up above 25,000 mark. It remains relatively stronger than the broad stock market:

The S&P 500 index fluctuated on Friday, as investors were taking short-term profits off the table following tech stocks' downward correction. Was this a topping pattern or just consolidation before another leg higher? For now, it looks like some relatively flat correction within an uptrend. There have been no confirmed negative signals so far.

Concluding, the S&P 500 index will likely open flat today, and it may extend its Friday's fluctuations. If the index breaks above the resistance level of around 2,780, we could see more buying pressure. But there is also a close resistance level of 2,800. Tech stocks will probably remain weaker than the broad stock market. For now, it looks like a correction, and not a new downtrend.

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

© 2005-2019 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