S&P 500 sets another record, but this may be short-term top

January 9, 2018 09:26 AM

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Briefly: 
Intraday trade: Our Monday's intraday trading outlook was bearish. It proved partly wrong because the S&P 500 gained just 0.2% following the slightly lower opening of the trading session. The broad stock market continued its short-term uptrend, but it remained within a relatively narrow trading range. There have been no confirmed negative signals so far. However, we can see some clear short-term overbought conditions along with an overly bullish investors' sentiment. Therefore, an intraday short position is favored today. Stop-loss is at the level of 2,765 and potential profit target is at 2,710 (S&P 500 index).

Our intraday outlook is bearish today. Our short-term outlook is neutral, and our medium-term outlook is neutral:

Intraday outlook (next 24 hours): bearish

Short-term outlook (next 1-2 weeks): neutral

Medium-term outlook (next 1-3 months): neutral

The main U.S. stock market indexes were mixed between -0.05% and +0.3% on Monday, as investors took some short-term profits off the table following the recent rally. The S&P 500 index has reached yet another new all-time high at the level of 2,748.51. The broad stock market continues its nine-year-long bull market. The Dow Jones Industrial Average lost 0.05%, as it was relatively weaker than the broad stock market yesterday. The blue-chip index reached a new record high at 25,311.99 before closing below its Friday's trading session close. The technology Nasdaq Composite extended its rally, as it gained 0.3%. It reached a new record high above the level of 7,100. The nearest important level of support of the S&P 500 index is at around 2,730, marked by Friday's daily low. The next support level is at 2,715-2,720, marked by Thursday's daily gap up of 2,714.37-2,719.07. The support level is also at 2,695-2,700, marked by recent consolidation. On the other hand, the potential resistance level is at 2,750. There have been no confirmed negative signals so far. However, we still can see medium-term technical overbought conditions along with negative technical divergences:

Flat Expectations
Expectations before the opening of today's trading session are virtually flat, with index futures currently up 0.1% vs. their Monday's closing prices. The European stock market indexes have gained 0.1-0.5% so far. There will be no new important economic data announcements today. The S&P 500 futures contract trades within an intraday uptrend, as it retraces its yesterday's intraday move down. The nearest important level of support is at around 2,735-2,740, marked by some short-term local lows. The next support level is at 2,720-2,730, marked by recent fluctuations. On the other hand, the potential resistance level is at 2,750. The futures contract fluctuates along its new record high, as we can see on the 15-minute chart:

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