Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
The NEXT BIG EMPIRE WILL BE..... CANZUK - 25th June 22
Who (or What) Is Really in Charge of Bitcoin's Price Swings? - 25th June 22
Crude Oil Price Forecast - Trend Breaks Downward – Rejecting The $120 Level - 25th June 22
Everyone and their Grandma is Expecting a Big Stocks Bear Market Rally - 23rd June 22
The Fed’s Hawkish Bite Left Its Mark on the S&P 500 Stocks - 23rd June 22
No Dodging the Stock Market Bullet - 23rd June 22
How To Set Up A Business To Better Manage In The Free Market - 23rd June 22
Why Are Precious Metals Considered A Good Investment? Find Out Here - 23rd June 22
UK House Prices and the Inflation Mega-trend - 22nd June 22
Sportsbook Betting Reviews: How to Choose a Sportsbook- 22nd June 22
Looking to buy Cannabis Stocks? - 22nd June 22
UK House Prices Momentum Forecast - 21st June 22
The Fed is Incompetent - Beware the Dancing Market Puppet - 21st June 22
US Economy Headed for a Hard Landing - 21st June 22
How to Invest in EU - New Opportunities Uncovered - 21st June 22
How To Protect Your Assets During Inflation - 21st June 22
AI Tech Stocks Current State, Is AMAZON a Dying Tech Giant? - 20th June 22
Gold/Gold miners fundamental checkup - 20th June 22
Personal Finance Tips: How To Get Out Of A Tough Financial Situation - 20th June 22
UK House Prices Relative to GDP Growth - 19th June 22
Will Global Markets Be Pushed Deeper Into Crisis Event By The US Fed? - 19th June 22
Useful Things You Need To Know About Tweezer Top Candlestick Pattern - 19th June 22
UK House Prices Real Terms Sustainable Trend - 17th June 22
Why I’m buying the “new” value stocks… - 17th June 22
Optimize Benefits from R&D in Software Product Development with an R&D Tax Credit Software - 17th June 22
Want To Save On Your Business Energy? Here Are Some Helpful Tips - 17th June 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Topping Pattern or Just Quick Correction Before Another Leg Up?

Stock-Markets / Stock Markets 2019 Feb 07, 2019 - 04:02 PM GMT

By: Paul_Rejczak

Stock-Markets

Stocks slightly retraced their recent advance yesterday, as investors took some short-term profits off the table. The S&P 500 index remained above the 61.8% retracement of its September-December sell-off. Is this a topping pattern or just a correction within the uptrend?

The U.S. stock market indexes lost 0.1-0.4% on Wednesday, retracing some of their recent advance, as investors took short-term profits off the table. The S&P 500 index broke above its short-term consolidation on Wednesday a week ago and it continued higher. The market is above the 61.8% Fibonacci retracement of its October-December downward correction of 20.2% (2,713.88). It has gained 390 points from the late December medium-term low, but it is still around 200 points below the September 21st record high of 2,940.91. The Dow Jones Industrial Average lost 0.1% and the Nasdaq Composite lost 0.4% on Wednesday.

The nearest important resistance level of the S&P 500 index remains at 2,750-2,760, marked by some previous local highs. The resistance level is also at 2,800, marked by the early December local high. On the other hand, the support level is at 2,700-2,710, marked by the previous resistance level. The support level is also at 2,650.


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, it has retraced more than 61.8% of the whole decline off the September high. The index gets closer to its October-November local highs and the resistance level of 2,800, as we can see on the daily chart:

 

Negative Expectations, Correction or a Reversal?

Expectations before the opening of today's trading session are negative, because the index futures contracts trade 0.6% below their yesterday's closing prices. The European stock market indexes have lost 0.1-1.2% so far. Investors will wait for the Initial Claims number release at 8:20 a.m. The broad stock market will likely extend its short-term downward correction and we may see some more profit-taking action.

The S&P 500 futures contract trades within an intraday downtrend, following a breakdown below the short-term trading range. as it fluctuates following yesterday's advance. The nearest important resistance level is now at around 2,720, marked by the recent local lows. The resistance level is also at 2,730-2,735. On the other hand, the support level is at 2,700-2,710, among others. The futures contract remains below the recent upward trend line, as the 15-minute chart shows:

Nasdaq Also Lower

The technology Nasdaq 100 futures contract follows a similar path, as it trades within an intraday downtrend. The market gained over 1,200 points from December the 26th local low of around 5,820 in the recent weeks. And we saw some short-term technical overbought conditions. The nearest important resistance level is now at 7,000-7,050. The support level is at 6,900-6,950, marked by the previous resistance level. The Nasdaq futures contract is back slightly below the 7,000 mark this morning, as we can see on the 15-minute chart:

Big Cap Tech Stocks Going Sideways Again

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). Apple released its quarterly earnings last week. Then the stock broke above its recent trading range and the resistance level of $155-160. It retraced some more of its November-December sell-off. There have been no confirmed negative signals so far:

Now let's take a look at the daily chart of Amazon.com, Inc. (AMZN). The market broke above one of its three-month-long downward trend lines recently. Since then it has been going sideways. There is a resistance level at around $1,700-1,750. On Friday it bounced off that resistance level following Thursday's quarterly earnings release:

Dow Jones - Short-Term Consolidation

The Dow Jones Industrial Average extended its short-term uptrend this week after breaking above its medium-term downward trend line. Will the blue-chip stocks' gauge continue higher and reach its record high again? Or reverse lower in the near term? There have been no confirmed negative signals so far:

Japanese Nikkei Bounced Off 21,000 Resistance Level

Let's take a look at the Japanese Nikkei 225 index. It accelerated the downtrend in late December, as it fell slightly below the level of 19,000. Since then it has been retracing the downtrend. Recently it got close to 21,000 mark. For now, it still looks like an upward correction and the Nikkei is relatively weak, as it remains below the October - November local lows:

The S&P 500 index broke above its short-term consolidation a week ago on Wednesday, as investors reacted to the Fed's Rate Decision release. Is this a new medium-term uptrend or still just upward correction before another medium-term leg lower? The market continues to trade above the 61.8% Fibonacci retracement of the whole medium-term decline. There have been no confirmed negative signals so far. But we still can see some short-term technical overbought conditions.

Concluding, the S&P 500 index will likely open lower today. We may see some more profit-taking action in the near term. However, there have been no confirmed negative signals so far. For now, it looks like a downward correction.

If you enjoyed the above analysis and would like to receive free follow-ups, we encourage you to sign up for our daily newsletter – it’s free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to our premium daily Gold & Silver Trading Alerts. Sign up now.

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts
SunshineProfits.com

Stock market strategist, who has been known for quality of his technical and fundamental analysis since the late nineties. He is interested in forecasting market behavior based on both traditional and innovative methods of technical analysis. Paul has made his name by developing mechanical trading systems. Paul is the author of Sunshine Profits’ premium service for stock traders: Stock Trading Alerts.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Paul Rejczak Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in