S&P 500's New Medium-Term High, But Will Uptrend Continue?

The U.S. stock market indexes gained 0.6-0.7% on Wednesday, as investors' sentiment remained bullish. The S&P 500 index retraced more of its October-December downward correction of 20.2% yesterday. The market is now close to the previous medium-term local highs following an intraday rally to the new medium-term high of 2,821.24. The broad stock market's gauge is now just 4.4% below September the 21st record high of 2,940.91. The Dow Jones Industrial Average gained 0.6% and the Nasdaq Composite gained 0.7% on Wednesday.

The nearest important resistance level of the S&P 500 index is at around 2,815-2,820, marked by the medium-term local highs. On the other hand, the support level is now at 2,795-2,800, marked by the yesterday's daily gap up of 2,798.32-2,799.78. The support level is also at 2,785, marked by the Tuesday's daily gap up of 2,784.00-2,786.73.

The broad stock market retraced all of its December sell-off and it got close to 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 break above the mentioned previous local highs? There have been no confirmed negative signals so far. The index is now back at the previously broken two-month-long upward trend line:

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

 

New Highs, but More Uncertainty

Expectations before the opening of today's trading session are slightly negative, because the index futures contracts trade 0.1-0.2% below their Wednesday's closing prices. The European stock market indexes have been mixed so far. Investors will wait for some economic data announcements today: Initial Claims at 8:30 a.m., New Home Sales at 10:00 a.m. The broad stock market will likely retrace some of its recent rally. We may see some short-term uncertainty. However, there have been no confirmed negative signals so far.

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