• 59 mins Tesla Reveals Its New Cybertruck
  • 1 day Low Prices Plague Beleaguered Lithium Miners
  • 2 days Is This The Big Biotech Bust?
  • 2 days Funding Is The Biggest Hurdle For Clean Energy
  • 3 days Walmart Reaches Out To Chilean Government For Protection
  • 3 days The Most Exciting Gold Find Of The Decade
  • 3 days Mining Boom Sparks Deforestation Concerns
  • 4 days The Cannabis Culling Has Wall Street Disappointed
  • 4 days Vigilante Offers $100,000 Bounty To Hack Banks
  • 5 days The Dairy Industry Is Dying
  • 5 days The Most Impressive Electric Vehicle Of The Year
  • 6 days Gold Miners Are Having A Stellar Second Half
  • 7 days How 3D Printing Is Turning Each And Every Industry On Its Head
  • 7 days Is The $3.5 Trillion Healthcare Industry About To Get Much More Transparent?
  • 8 days Gamblers Are Betting Big On Trump’s Impeachment
  • 8 days Even Banks Can't Answer Aramco's Trillion Dollar Question
  • 9 days Will Bezos Buy The Seattle Seahawks?
  • 9 days 6 Tech Trends Transforming The Travel Industry
  • 10 days Ousted Uber CEO Cashes Out $500 Million In Stock
  • 10 days Trump Prepares For Another Key Tariff Decision
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Paul Rejczak

Paul Rejczak

Writer, Sunshine Profits

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…

Contact Author

  1. Home
  2. Markets
  3. Other

Stocks Dip On Escalating Trade War Fears

Stock

Stocks were mixed on Friday, as investors continued to hesitate following recent fluctuations. The broad stock market is expected to open lower following trade war fears, among other factors. So is this a topping pattern or just a correction before another leg up? There are still two possible medium-term scenarios.                                               

The U.S. stock market indexes were mixed between -0.3 percent and +0.5 percent on Friday, extending their short-term consolidation, as investors' sentiment remained neutral. The S&P 500 index continues to trade along 2,750 mark. It currently trades 4.1 percent below the January's 26th record high of 2,872.87. The Dow Jones Industrial Average gained 0.5 percent, as it was relatively stronger than the broad stock market, and the technology Nasdaq Composite lost 0.5 percent on Friday.

The nearest important level of resistance of the S&P 500 index remains at around 2,780-2,800, marked by the recent local highs along with the mid-March local high. The resistance level is also at 2,830-2,840, marked by the late January short-term consolidation. On the other hand, support level is at 2,750, marked by the previous level of resistance and some recent local lows. The next important level of support is at 2,735-2,740, marked by June the 4th's daily gap-up of 2,736.93-2,740.54. The support level is also at 2,700-2,720.

The broad stock market retraced some of early June advance recently. But it keeps bouncing off support level of around 2,750. Will the uptrend resume? Or is this just a flat correction within a new downtrend? There are still two possible medium-term scenarios - bearish that will lead us below the February low following trend line breakdown, and the bullish one in a form of medium-term double top pattern or breakout towards 3,000 mark. There is also a chance that the market will just go sideways for some time, and that would be positive for bulls in the long run (some kind of an extended flat correction). The S&P 500 index trades along its two-month-long upward trend line:

(Click to enlarge)

Negative Expectations, but Will the Downtrend Continue?

Expectations before the opening of today's trading session are very negative, because the index futures contracts trade 0.7-1.0 percent below their Friday's closing prices. The European stock market indexes have lost 0.9-1.2 percent so far. Investors will wait for the New Home Sales number release at 10:00 a.m. The broad stock market will likely open lower today following global stock markets' decline. Then the S&P 500 index may extend its short-term fluctuation along the level of 2,750. Is this a new downtrend? For now it looks like a correction within the two-month long uptrend. However, if the index breaks below its last week's local lows, we could see more selling pressure. Related: U.S. Money Market Funds Post Highest Outflows Since 2011

The S&P 500 futures contract trades within an intraday downtrend, as it slightly extends its overnight decline. The nearest important level of resistance is at around 2,750, marked by the short-term local highs. The next resistance level is at 2,760-2,770. On the other hand, level of support is at around 2,735, marked by last week's Tuesday's local low. The futures contract retraces most of its last week's rebound, as we can see on the 15-minute chart:

(Click to enlarge)

Nasdaq Below Last Week's Low

The technology Nasdaq 100 futures contract follows a similar path, as it continues lower following an overnight decline. It retraced all of its rally off last week's Tuesday's low. The Nasdaq 100 lost more than 200 points from the Thursday's overnight new record high of around 7,360. Will it continue lower this time? The nearest important level of support is at around 7,080-7,100. The support level is also at 7,000-7,050. On the other hand, level of resistance is at around 7,200, among others. The Nasdaq futures contract trades slightly below its last week's low, as the 15-minute chart shows:

(Click to enlarge)

Apple, Amazon - Both Went Lower, New Downtrend or Just Correction?

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). It reached new record high three weeks ago, as it slightly extended its uptrend following a breakout above the price of $190. Then the stock retraced some of its advance, as it fell below $190 again. It continued the short-term downtrend on last week's Tuesday, but then it bounced off support level of around $185, marked by the previous local lows. Will it reverse the decline here? We may see some more short-term fluctuations:

(Click to enlarge)

Now let's take a look at Amazon.com, Inc. stock (AMZN) daily chart. It reached the new record high on Thursday, as it was relatively much stronger than the broad stock market. Then it retraced most of its recent advance on Friday.

Related: Tech Unicorns Are Taking Over European Stock Markets

So we may see a downward correction following the recent bull-run. The nearest important level of support is at around $1,670-1,700. We still can see some negative technical divergences:

(Click to enlarge)

Dow Jones Closer to Late May Local Lows

The Dow Jones Industrial Average broke below its two-month-long upward trend line on Tuesday. Then it continued lower, as it fell below the level of 24,500 on Thursday.  For now, it looks like some more medium-term sideways price action. However, if DJIA breaks below the support level of around 24,250-24,500, we could see more selling pressure:

(Click to enlarge)

The S&P 500 index is expected to open lower today following the global stock markets' overnight weakness. Will the recent downtrend resume? If the index breaks below the support level of around 2,740-2,750, we could see some more selling pressure. For now it looks like a downward correction within a medium-term uptrend.

Concluding, the broad stock market will likely open lower today. We may see some more uncertainty, as the S&P 500 index continues to trade below the important resistance level of around 2,780-2,800. If the index breaks below the support level of around 2,740-2,750, it could continue towards the level of 2,700-2,720.

By Paul Rejczak via Sunshine Profits

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment