Stocks Extend Their Uptrend As Indices Reach New Record Highs Again

June 5, 2017

Our intraday outlook is now bearish, and our short-term outlook is bearish. Our medium-term outlook remains neutral, following S&P 500 index breakout above last year's all-time high:

Intraday outlook (next 24 hours): bearish

Short-term outlook (next 1-2 weeks): bearish

Medium-term outlook (next 1-3 months): neutral

Long-term outlook (next year): neutral

The U.S. stock market indexes gained between 0.3% and 1.1% on Friday, as investors reacted to monthly jobs report release, among others. The S&P 500 index has reached yet another new all-time high at the level of 2,440.23, following recent breakout above week-long consolidation along 2,400 mark. Stocks have rebounded strongly after their mid-May quick two-session sell-off. They continue their over eight-year-long bull market off 2009 lows. The Dow Jones Industrial Average broke slightly above the level of 21,200 on Friday, as it reached new record high of 21,225.04. The technology Nasdaq Composite remains relatively stronger than the broad stock market. It reached new record high, as it broke above the level of 6,300 for the first time. The nearest important resistance level of the S&P 500 index is at around 2,440-2,450, marked by new record high, among others. On the other hand, support level is currently at around 2,415-2,420, marked by previous resistance level. The next support level is at 2,400-2,410, marked by the May 25 daily gap up of 2,405.58-2,408.01, among others. The support level is also at 2,390-2,395, marked by some short-term local lows. Will the uptrend continue towards 2,500 mark? There have been no confirmed negative signals so far. However, we can see some overbought conditions and negative technical divergences. The S&P 500 index is currently trading close to its November-April upward trend line, as we can see on the daily chart:

Mixed Expectations As Investors Take Short-Term Profits Off The Table

Expectations before the opening of today's trading session are virtually flat, with index futures currently between -0.05% and -0.1% vs. their Friday's closing prices. The main European stock market indexes have lost 0.2-0.6% so far. Investors will now wait for some economic data announcements: Productivity number at 8:30 a.m., ISM Services, Factory Orders at 10:00 a.m. The market expects that Productivity fell 0.2% in Q1, and the ISM Services number was at 57.0 in May. The S&P 500 futures contract trades within an intraday consolidation, following Friday's move up. It is trading slightly below new record high close to the level of 2,440. The nearest important resistance level is at around 2,435-2,440. On the other hand, support level is at 2,425-2,430, marked by recent local low. The next support level remains at 2,400-2,410. The market trades within a short-term uptrend, as it is above the early March local high. There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions, along with negative technical divergences:

Technology Stocks Trade At New Record Highs, But Will They Continue Higher?

The technology Nasdaq 100 futures contract follows a similar path, as it currently trades within an intraday consolidation along the level of new record high. The nearest important resistance level is at 5,880-5,900. Potential level of resistance is also at 6,000 mark. The market extends its six-week-long rally following late April breakout above the level of 5,500. On the other hand, the nearest important level of support is at around 5,830, marked by recent fluctuations. The next support level is at 5,800-5,820, marked by short-term consolidation. There have been no confirmed negative signals so far. But will technology stocks continue their rally despite some short-term overbought conditions? We can see some negative technical divergences:

Concluding, the S&P 500 index has reached new all-time high on Friday, as it extended its gains following a breakout above early March high along the level of 2,400. Investors' sentiment improved following monthly jobs report release, among others. The market continues its eight-year-long bull market. But will the uptrend accelerate? Or is this some topping pattern before downward reversal? We still can see some negative medium-term technical divergences. There have been no confirmed negative signals so far.

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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 is a 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.

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