Stocks retrace their recent weakness, new uptrend?

July 10, 2017 09:22 AM

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 gained between 0.4% and 1.0% on Friday, as investors' sentiment improved following better-than-expected monthly jobs data release. The S&P 500 Index got close to its late June local low at around 2,405 on Thursday. It has bounced off that support level. The index is now trading just 1.2% below its June 19 all-time high of 2,453.82. It reached a new record high after a breakout above short-term consolidation along the level of 2,420-2,440. Stocks have rebounded sharply following their mid-May quick two-session sell-off and continued over eight-year-long bull market off 2009 lows. The Dow Jones Industrial Average gained 0.4% on Friday, as it bounced off support level of 21,300 again. The technology Nasdaq Composite was relatively stronger than the broad stock market, as it gained 1.0%. It has retraced its Thursday's move down. The nearest important support level of the S&P 500 Index is at around 2,400-2,410, marked by the May 25 daily gap up of 2,405.58-2,408.01, among others. On the other hand, the level of resistance is at 2,425-2,430, marked by recent fluctuations. The next resistance level remains at 2,450-2,455, marked by all-time high. There have been no confirmed negative signals so far. However, we can see overbought conditions and negative technical divergences. The S&P 500 Index is trading within its a month-long consolidation, as we can see on the daily chart:

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