S&P 500: More Sideways Trading Action

The U.S. stock market indexes lost 0.1-0.6% on Wednesday, as investors continued to hesitate following last week's Friday's sell-off. 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 last week. But then it fell close to the 2,800 mark again. The Dow Jones Industrial Average lost 0.1% and the Nasdaq Composite lost 0.6% on Wednesday.

The nearest important resistance level of the S&P 500 index remains at around 2,830-2,845, marked by the recent local highs. The resistance level is also at 2,850-2,860, marked by the early October local lows. On the other hand, the support level is at 2,800-2,810, marked by the recent resistance level and the daily gap up of 2,798.32-2,799.78. The support level is also at 2,785, marked by the daily gap up of 2,784.00-2,786.73.

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? Last 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:

Positive Expectations, Upward Reversal or Just Consolidation?

Expectations before the opening of today's trading session are virtually flat because the index futures contracts trade along their Wednesday's closing prices. The European stock market indexes have gained 0.1-0.4% so far. Investors will wait for some economic data announcements today: the Final GDP, Unemployment Claims at 8:30 a.m., Pending Home Sales at 10:00 a.m. The broad stock market will likely continue to fluctuate following the recent decline. For now, it looks like a consolidation within a medium-term uptrend.

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