Positive Expectations, Breakout Imminent?

The U.S. stock market indexes gained 0.7-0.8% on Friday, breaking above their week-long consolidation, as investors’ sentiment improved following better-than-expected economic data releases. The S&P 500 index retraced more of its October-December downward correction of 20.2% recently. The broad stock market's gauge traded just around 3% below September the 21st record high of 2,940.91. But then it fell close to the 2,800 mark again. Today, we may see an attempt at extending the medium-term uptrend. Both the Dow Jones Industrial Average and the Nasdaq Composite gained 0.8% on Friday.

The nearest important resistance level of the S&P 500 index is now at 2,845-2,860, marked by the short-term local highs. The next resistance level is at 2,900. On the other hand, the support level is now at around 2,820, marked by Friday’s daily low. The support level is also at 2,800-2,810, marked by the recent resistance level and the daily gap up of 2,798.32-2,799.78.

The broad stock market retraced all of its December sell-off and it broke above the medium-term resistance level of around 2,800-2,820, marked by the October-November local highs recently. So is it still just a correction or a new medium-term uptrend? The market broke above the 61.8% Fibonacci retracement of the 20% decline. And we may see an attempt at getting back to the record highs. But will the index continue much higher above the mentioned previous local highs? Previous Friday's trading session cast some doubts on bulls' power. However, there have been no confirmed negative medium-term signals so far. The index bounced off the previously broken two-month-long upward trend line:

 

Very Positive Expectations

Expectations before the opening of today's trading session are positive, because the index futures contracts trade 0.7-0.8% above their Friday's closing prices. The European stock market indexes have gained 0.6-0.9% so far. Investors will wait for some important economic data announcements today: Retail Sales at 8:30 a.m., ISM Manufacturing PMI, Business Inventories, Construction Spending at 10:00 a.m. The broad stock market will likely continue its Friday’s rally. We may see an attempt at breaking above the recent local high of around 2,860.

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