S&P 500 At New Medium-Term High, But Correction May Be Coming

The U.S. stock market indexes gained 0.2-0.6% on Friday, extending their uptrend, as investors sentiment remained bullish. The S&P 500 index retraced more of its October-December downward correction of 20.2%. The broad stock market's gauge is now just 1.6% below September the 21st record high of 2,940.91. The Dow Jones Industrial Average gained 0.2% and the Nasdaq Composite gained 0.6% on Friday.

The nearest important resistance level of the S&P 500 index remains at 2,890-2,900, marked by some early October local highs. The next resistance level is at 2,920-2,940, marked by the mentioned record high, among others. On the other hand, the support level is now at 2,880-2,885, marked by Friday’s daily gap up of 2,881.28-2,882.99. The support level is also at 2,860-2,865, marked by the recent local lows.

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? We may see an attempt at getting back to the record high. There have been no confirmed negative medium-term signals so far. The index gets closer to its last October all-time high, as we can see on the daily chart:

Slightly Negative Expectations

Expectations before the opening of today's trading session are slightly negative because the index futures contracts trade 0.1-0.2% below their Friday’s closing prices. The European stock market indexes have been mixed so far. Investors will wait for the Factory Orders number release at 10:00 a.m. The broad stock market will likely fluctuate following the recent rally. We may see a profit-taking action at some point. However, there have been no confirmed negative signals so far.

The S&P 500 futures contract trades within an intraday consolidation following an overnight decline. The nearest important resistance level is at around 2,895-2,900. On the other hand, the support level is at 2,880-2,885, marked by the recent resistance level. The futures contract remains above its short-term upward trend line, as we can see on the 15-minute chart:

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Disclosure: None.

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