Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
BREXIT, Italy’s Deficit, The EU Summit And Fomcs Minutes In Focus - 16th Oct 18
Is this the Start of a Bear Market for Stocks? - 16th Oct 18
Chinese Economic Prospects Amid US Trade Wars - 16th Oct 18
2019’s Hottest Commodity Is About To Explode - 15th Oct 18
Keep A Proper Perspective About Stock Market Recent Move - 15th Oct 18
Is the Stocks Bull Dead? - 15th Oct 18
Stock Market Bottoms are a Process - 15th Oct 18
Fed is Doing More Than Just Raising Rates - 14th Oct 18
Stock Markets Last Cheap Sector - Gold - 14th Oct 18
Next Points for Crude Oil Bears - 13th Oct 18
Stock Market Crash: Time to Buy Stocks? - 12th Oct 18
Sheffield Best Secondary School Clusters for 2018-19 Place Applications - 12th Oct 18
Trump’s Tariffs Echo US Trade Policy That Led to the Great Depression - 12th Oct 18
US Dollar Engulfing Bearish Pattern Warns Of Dollar Weakness - 12th Oct 18
Stock Market Storm Crash, Dow Plunges to Trend Forecast! - 12th Oct 18
SP500 Stock Market Sell Off Well Forecast by President Trump - 11th Oct 18
USD and US Tr. Yields Retreat, GBP Gains on Brexit-deal Report - 11th Oct 18
Loss Of Yield Curve "Shock Absorber" Could Mean A Rough Ride Ahead For Markets & Housing - 11th Oct 18
Just How Bearish is the Stock Market’s Breadth? - 11th Oct 18
Here’s Why Gold Stocks, Gold, and Silver Are Great Buys Now - 10th Oct 18
Russian Ruble Technical Chart Analysis and Forecast - 10th Oct 18
Society Trends To Keep in Mind in the USA - 10th Oct 18
[eBook] How to Identify Turning Points in the Market - 10th Oct 18
Euro Vulnerable as Slowing Growth Reveals Underlying Issues - 9th Oct 18
Construction Companies to Watch For in 2019 - 9th Oct 18
ECB Meeting Minutes and US Inflation Data in Focus - 9th Oct 18
Interest Rate Shock-Time to Find Out Who has been Swimming Naked - 9th Oct 18
Unintended Consequences of Expanding Sheffield's Best Ranking State Secondary Schools - 9th Oct 18
Crude Oil Price Trend Forecast 2018 Update - 9th Oct 18
Inflation Is Starting To Heat Up - 8th Oct 18
Stock Market Seasonal Influence at Work - 8th Oct 18
Barrick Randgold Deal Breathes New Life into Gold - 8th Oct 18
Stock Market Sell Off, Dollar Rally Expected, Now What? - 8th Oct 18
The Chartology of Gold and Silver - 8th Oct 18
The Income for Life Playbook - 8th Oct 18

Market Oracle FREE Newsletter

Trading Any Market

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

© 2005-2018 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