Stocks Going Sideways, Flat Correction Or Some Topping Pattern?

The U.S. stock market indexes were mixed between -0.3% and +0.3% on Friday, as investors hesitated following the recent advances. So volatility was relatively small despite the monthly jobs data release. The S&P 500 index broke above its short-term consolidation on Wednesday and it continued slightly higher in the late last week. The market is now at the 61.8% Fibonacci retracement of its October-December downward correction of 20.2% (2,713.88). It has gained 370 points from the late December medium-term low, but it is still around 235 points below the September 21st record high of 2,940.91. The Dow Jones Industrial Average gained 0.3% and the Nasdaq Composite lost 0.3% on Friday.

The nearest important resistance level of the S&P 500 index is at 2,710-2,720, marked by the mentioned 61.8% Fibonacci retracement and Friday's daily high. The resistance level is also at 2,750-2,760. On the other hand, the support level is at 2,650, marked by the recent fluctuations. The support level is also at 2,615-2,625, marked by the short-term 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. Since then, the market has retraced 61.8% 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

 

Short-Term Consolidation

The index futures contracts trade between 0.0% and +0.1% vs. their Friday's closing prices. So expectations before the opening of today's trading session are virtually flat. The European stock market indexes have been mixed so far. Investors will wait for the Factory Orders number announcement at 10:00 a.m. They will also wait for more quarterly corporate earnings releases. The broad stock market will likely fluctuate within a short-term consolidation after the recent rally. There have been no confirmed negative signals so far. However, we can see some short-term technical overbought conditions.

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