More Volatility As Stocks Retrace Some Of Their Recent Rally

Briefly:

Intraday trade: Our Wednesday’s intraday trading outlook was bearish. It proved accurate because the S&P 500 index lost 0.5%, following neutral opening of the trading session. However, the market didn’t reach our intraday profit target level of 2,535 (daily low at 2,544.00). The S&P 500 index may retrace more of its October rally. Therefore, intraday short position is favored again. Stop-loss is now at the level of 2,575 and potential profit target is at 2,535 (S&P 500 index).

Our intraday outlook is bearish today. Our short-term outlook is neutral, and our medium-term outlook is neutral:

Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): neutral

The main U.S. stock market indexes lost 0.5% on Wednesday, as investors took short-term profits off the table following recent move up. The S&P 500 index fell the lowest since early October, before bouncing off support level at around 2,550. It currently trades 0.8% below Monday’s new record high of 2,578.29. The Dow Jones Industrial Average retraced some of its recent rally yesterday, as it fell 0.5%. It bounced off resistance level marked by Tuesday’s new all-time high of 23,485.25. The technology Nasdaq Composite trades around 1.2% below its Monday’s new record high of 6,641.57. The nearest important level of support of the S&P 500 index is at 2,545-2,550, marked by yesterday’s daily low and some previous local lows. The next support level is at 2,520-2,530, marked by the October 2 daily gap up of 2,519.44-2,520.40, among others. On the other hand, resistance level is at 2,565-2,570, marked by short-term fluctuations. The next level of resistance is at around 2,580, marked by the above-mentioned all-time high. The S&P 500 index retraced some of its recent advance yesterday, as it fell below the level of 2,550. Is this a new downtrend or just quick downward correction before another leg up? There have been no confirmed negative signals so far. However, we still can see medium-term technical overbought conditions: