The U.S. stock market indexes lost 0.2-0.4% on Wednesday, retracing some more of their recent rally as investors continued to take short-term profits off the table. The S&P 500 index traded more than 180 points above last week's Monday's local low on Tuesday. It is currently 2.5% below its May the 1 record high of 2,954.13. The Dow Jones Industrial Average lost 0.2% and the Nasdaq Composite lost 0.4%.
The nearest important resistance level of the S&P 500 index remains at 2,900-2,910. The resistance level is also at 2,930-2,950. On the other hand, the support level is at 2,875-2,880. The next support level remains at 2,830-2,850.
The broad stock market broke above last year's high in early May. But then the index retraced all of April's advance. The market also broke below its two-month-long upward trend in early May but is now headed higher after breaking above its month-long downward trend line:
More Short-Term Fluctuations
The index futures contracts trade 0.3% above their yesterday's closing prices, so the expectations before the opening of today's trading session are slightly positive. The European stock market indexes have gained 0.1-0.4% so far. The broad stock market will likely further extend its short-term consolidation following last week's rally. The S&P 500 index may fluctuate below the mentioned resistance level of 2,900.
The S&P 500 futures contract trades within an intraday consolidation and its nearest important support level is around 2,865-2,875, marked by the short-term local lows. On the other hand, the resistance level remains at 2,890-2,900. The futures contract gets closer to the recent consolidation as the 15-minute chart shows.
Nasdaq Still Close To 7,500
The Nasdaq 100 futures contract follows a similar path, as it trades higher.. The market extended its rally on Friday after breaking above the resistance level of 7,250-7,300. Then it broke above the 7,500 mark and entered a short-term consolidation. It got close to the 7,600 mark on Tuesday, before reversing downwards. The nearest important resistance level remains at 7,550-7,600. The Nasdaq futures contract retraces more of its recent decline, as we can see on the 15-minute chart.
Big Cap Tech Stocks: Short-Term Sideways Trend
Let's take a look at the Apple's (NASDAQ:AAPL) daily chart (chart courtesy of stockcharts.com). The stock extended its rally on May 1 following the quarterly earnings release. Then the price reversed the upward course and broke below the medium-term upward trend line. Since then it is trading within a down trend. And last week the stock broke above its downward trend line. For now, it looks like an upward correction. However, if the stock gets back above $200, we could see more buying pressure.
Now let's take a look at the daily chart of Microsoft (NASDAQ:MSFT), which accelerated its uptrend in late April. Since then, the market has been trading within a consolidation. On Monday a week ago it broke below the support level, but then it reversed higher. It reached the new record high of $134.24 on Tuesday, before reversing its intraday uptrend once again.
Dow Jones Also Going Sideways
The Dow Jones Industrial Average has been relatively weaker than the broad stock market since February. The resistance level remained at around 26,800-27,000, marked by the last year's topping pattern and the record high of 26,951.8. Recently the blue-chip stock gauge followed the broad stock market, as it accelerated the down trend. The market broke below its important 200-day moving average, but then it went back higher. The resistance level is now around 26,000, marked by the previous local highs.
Nikkei Back At 21,000
Let's take a look at the Japanese Nikkei 225 index. It retraced some more of its recent decline early this week. However the market went back down to the 21,000 mark. The index continues to trade along its previous local lows.
The S&P 500 index accelerated its short-term down trend a week ago, as it fell to the local low of around 2,729 on Monday. Then the market broke above the month-long downward trend line and it kept retracing the late May decline. Will it get back to the record high? There have been no confirmed negative signals so far. However, we saw some short-term overbought conditions.
Conclusion
As for the S&P 500, we could see more short-term fluctuations following its recent rally.