Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Stock Market Pause Should Extend - 21st April 19
Why Gold Has Been the Second Best Asset Class for the Last 20 Years - 21st April 19
Could Taxing the Rich Solve Income Inequality? - 21st April 19
Stock Market Euphoria Stunts Gold - 20th April 19
Is Political Partisanship Killing America? - 20th April 19
Trump - They Were All Lying - 20th April 19
The Global Economy Looks Disturbingly Like Japan Before Its “Lost Decade” - 19th April 19
Growing Bird of Paradise Strelitzia Plants, Pruning and Flower Guide Over 4 Years - 19th April 19
S&P 500’s Downward Reversal or Just Profit-Taking Action? - 18th April 19
US Stock Markets Setting Up For Increased Volatility - 18th April 19
Intel Corporation (INTC) Bullish Structure Favors More Upside - 18th April 19
Low New Zealand Inflation Rate Increases Chance of a Rate Cut - 18th April 19
Online Grocery Shopping Will Go Mainstream as Soon as This Year - 17th April 19
America Dancing On The Crumbling Precipice - 17th April 19
Watch The Financial Sector For The Next Stock Market Topping Pattern - 17th April 19
How Central Bank Gold Buying is Undermining the US Dollar - 17th April 19
Income-Generating Business - 17th April 19
INSOMNIA 64 Birmingham NEC Car Parking Info - 17th April 19
Trump May Regret His Fed Takeover Attempt - 16th April 19
Downside Risk in Gold & Gold Stocks - 16th April 19
Stock Market Melt-Up or Roll Over?…A Look At Two Scenarios - 16th April 19
Is the Stock Market Making a Head and Shoulders Topping Pattern? - 16th April 19
Will Powell’s Dovish Turn Support Gold? - 15th April 19
If History Is Any Indication, Stocks Should Rally Until the Fall of 2020 - 15th April 19
Stocks Get Closer to Last Year’s Record High - 15th April 19
Oil Price May Be Setup For A Move Back to $50 - 15th April 19
Stock Market Ready For A Pause! - 15th April 19
Shopping for Bargain Souvenirs in Fethiye Tuesday Market - Turkey Holidays 2019 - 15th April 19
From US-Sino Talks to New Trade Wars, Weakening Global Economic Prospects - 14th April 19
Stock Market Indexes Race For The New All-Time High - 14th April 19
Why Gold Price Will “Just Explode… in the Blink of an Eye” - 14th April 19

Market Oracle FREE Newsletter

Top 10 AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Stock Market Topping Pattern or Just Pause Before Going Higher?

Stock-Markets / Stock Markets 2018 Jun 14, 2018 - 02:21 PM GMT

By: Paul_Rejczak

Stock-Markets

It was all about the FOMC Rate Decision release on Wednesday, and stocks' initial reaction to that news was slightly negative. The broad stock market extended its short-term consolidation along the resistance level. Will the uptrend continue or is this some topping pattern ahead of downward reversal? There are still two possible medium-term scenarios.

The U.S. stock market indexes lost between -0.1% and -0.5% on Wednesday, as investors reacted to the Fed's interest rate hike announcement. The S&P 500 index is still close to its mid-March local high of around 2,800. It currently trades 3.4% below January's 26th record high of 2,872.87. The Dow Jones Industrial Average lost 0.5%, and the technology Nasdaq Composite lost 0.1% yesterday.


The nearest important level of resistance of the S&P 500 index remains at around 2,790-2,800, marked by the recent local highs along with 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 the 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 week's 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? We may see some more uncertainty and profit taking action, because the market is close to the resistance level of around 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):

Flat Expectations, but More Economic Data Ahead

Expectations before the opening of today's trading session are virtually flat, because the index futures contracts trade between -0.1% and 0.0% vs. their yesterday's closing prices. The European stock market indexes have lost 0.2-0.5% so far. Investors will wait for some economic data announcements: Retail Sales, Initial Claims, the ECB Press Conference at 8:30 a.m., Business Inventories at 10:00 a.m. The broad stock market will likely continue its short-term fluctuations along the above-mentioned resistance level of around 2,800. We may see another attempt at breaking higher despite yesterday's initial negative reaction to Fed's Rate Decision release. There have been no confirmed negative signals so far.

The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates after an overnight decline. The nearest important level of resistance is at around 2,780-2,785, marked by the local highs. The next resistance level is at 2,795-2,800. On the other hand, support level is now at 2,770, marked by short-term local low. The support level is also at 2,750-2,760. The futures contract trades slightly below its recent local lows, as the 15-minute chart shows:

Nasdaq Backs Off New Record High

The technology Nasdaq 100 futures contract follows a similar path, as it bounces off an overnight low this morning. The market reached new all-time high yesterday, as it got closer to 7,300 mark. Then it fell to the level of 7,200. The nearest important level of support is at 7,150-7,200, marked by the recent fluctuations. The Nasdaq futures contract trades below its recent upward trend line, as we can see on the 15-minute chart:

Apple, Amazon - Close to Record Highs, Overbought?

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). It reached new record high a week ago, as it slightly extended its short-term uptrend following last week's Monday's breakout above $190. Then the stock retraced some of its advance, 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 came back to its last week's new record high yesterday, but it failed to continue higher. Is this a topping pattern before a downward reversal? There have been no confirmed negative signals so far. However, we can see some negative technical divergences. The nearest important level of resistance remains at around $1,715. On the other hand, support level is at $1,640, marked by the previous local high:

Dow Jones Continues Sideways

The Dow Jones Industrial Average fluctuated within a short-term consolidation yesterday. The blue-chip index remains above the level of 25,000 following its recent advance. Will the uptrend continue? There is a potential level of resistance at around 25,400-25,500, marked by mid-march local high. But there have been no confirmed negative signals so far:

The S&P 500 index trades within a short-term consolidation since Monday, as investors hesitate following last week's advance. Is this a topping pattern or just a flat correction before another leg higher? The market remains below the resistance level of around 2,800. For now, it looks like a correction within an uptrend, but if the index breaks below its recent local lows, it could accelerate lower.

Concluding, the S&P 500 index will likely open slightly lower to virtually flat following an overnight weakness. Will investors' sentiment improve later in the day? It's hard to say. We can see some more uncertainty, as the index trades just below the resistance level of 2,800. There have been no confirmed negative signals so far.

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