S&P 500's Downward Reversal Or Just Profit-Taking Action?

The U.S. stock market indexes were mixed between -0.2% and 0.0% on Wednesday, as investors took short-term profits off the table following the recent rally. The S&P 500 index retraced more of its October-December downward correction of 20.2% yesterday before reversing its intraday upward course. Last Friday it broke above the 2,900 level. The broad stock market's gauge is now just 1.4% below September the 21st record high of 2,940.91. The Dow Jones Industrial Average was unchanged and the Nasdaq Composite lost 0.1% on Wednesday.

The nearest important resistance level of the S&P 500 index remains at 2,920-2,940, marked by the mentioned record high, among others. On the other hand, the support level is at 2,900, marked by the recent resistance level. 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 2,900 last week. 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 got closer to its last October all-time high, as we can see on the daily chart:

 

Short-Term Consolidation

Expectations before the opening of today's trading session are virtually flat because the index futures contracts trade 0.1% below their Wednesday's closing prices. The European stock market indexes have been mixed so far. Investors will wait for series of economic data announcements today: Retail Sales, Philly Fed Manufacturing Index, Unemployment Claims at 8:30 a.m., Flash Manufacturing PMI, Flash Services PMI at 9:45 a.m., Business Inventories, CB Leading Index at 10:00 a.m. They will also wait for more quarterly corporate earnings releases. Stocks will likely continue to fluctuate along the local highs today. There have been no confirmed negative signals so far. However, we could see some more uncertainty as the broad stock market's gauge gets closer to the mentioned September's record high.

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