Wednesday's trading session was quite bullish as stocks extended their recent move up following Producer Price Index number release, among others. The market got closer to its mid-April local high after bouncing off medium-term upward trend line last week. Is this a new uptrend or just more sideways action after January - February sell-off? There are still two possible medium-term scenarios.
The U.S. stock market indexes gained between 0.7% and 1.0% on Wednesday, extending their recent move up, as investors reacted to economic data releases, among others. The S&P 500 index reached 2,700 mark, as it got closer to its mid-April local high. It is currently 6.1% below January 26 record high of 2,872.87. The Dow Jones Industrial Average gained 0.8%, and the technology Nasdaq Composite gained 1.0% yesterday.
The nearest important level of resistance of the S&P 500 index is at around 2,700-2,710, marked by March 22 daily gap down of 2,695.68-2,709.79. The next resistance level is at around 2,740, marked by some March local high. On the other hand, support level is now at 2,685, marked by recent resistance level. The support level is also at 2,675, marked by yesterday's daily low.
The broad stock market continues its medium-term consolidation following late January - early February sell-off. 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):
Mixed Expectations, Profit-Taking Action Ahead?
The index futures contracts trade between -0.1% and +0.1% vs. their yesterday's closing prices. So, expectations before the opening of today's trading session are virtually flat. The European stock market indexes have been mixed so far. Investors will wait for some economic data announcements: Consumer Price Index, Initial Claims at 8:30 a.m. The broad stock market will probably fluctuate after its recent rally today. There may be some profit-taking action following yesterday's breakout above short-term local highs. We will likely see some selling pressure at the above-mentioned resistance level of 2,700-2,710. There have been no confirmed negative signals so far.
The S&P 500 futures contract trades within an intraday consolidation, as it fluctuates after moving up yesterday. The nearest important level of resistance is at around 2,700. On the other hand, support level is now at 2,680-2,685, marked by recent resistance level. The support level is also at 2,670. The futures contract trades close to the level of 2,700 this morning, as the 15-minute chart shows: