S&P 500 Back At Local High, Will Uptrend Continue?

The U.S. stock market indexes gained 0.8-1.3% on Friday, retracing their recent decline, as investors sentiment improved ahead of the quarterly corporate earnings releases, among others factors. The S&P 500 index extended its rebound off the December 26th medium-term low of 2,346.58 recently. The index traded 20.2% below the September 21st record high of 2,940.91 on that day. Then the market rallied and retraced more than 50% of the move down (at 2,643.74). It broke slightly above 2,600 and it got closer to 2,700 more than a week ago. The Dow Jones Industrial Average gained 0.8% and the Nasdaq Composite gained 1.3% on Friday.

The nearest important resistance level of the S&P 500 index remains at 2,675-2,685, marked by the early December local highs. The resistance level is also at 2,700-2,710. On the other hand, the nearest important support level is at 2,645-2,655, marked by Friday's daily gap up of 2,647.20-2,657.33. The next support level is at around 2,600-2,610. The support level is also at 2,570-2,585, marked by some recent local lows.

The broad stock market broke below its two-month-long trading range in the mid-December, as the S&P 500 index fell below the level of 2,600. Then the market accelerated lower and it broke below the 2,400 mark. The downward correction reached 20.2% from the September all-time high, surpassing last year's January-February correction of around 12%. Since then, the market has retraced more than 50% of the whole decline off the September high. The index trades close to a possible resistance level of its previously broken upward trend line, as we can see on the daily chart:

Daily S&P 500 index chart - SPX, Large Cap Index


Negative Expectations

The index futures contracts trade 0.3-0.5% below their Friday's closing prices. So expectations before the opening of today's trading session are negative. The European stock market indexes have lost 0.2-0.5% so far. There will be no new important economic data announcement today. However, investors will wait for some quarterly earnings releases. The broad stock market will likely fluctuate along its recent local high. We may see another attempt at breaking higher. There have been no confirmed negative signals so far.

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Disclosure: None.

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