The U.S. stock market indexes lost between 0.6% and 1.2% on Wednesday, extending their short-term downtrend, as investors’ sentiment further worsened. The S&P 500 index got very close to the level of 2,800 before bouncing off that support level. It currently trades 1.9% below the January’s 26th record high of 2,872.87. The Dow Jones Industrial Average lost 0.6% and the technology Nasdaq Composite lost 1.2% on Wednesday.

The nearest important level of support of the S&P 500 index is now at around 2,800-2,805, marked by the recent local lows. The next level of support is at 2,780-2,790, among others. On the other hand, the level of resistance is now at around 2,825, marked by the recent support level. The resistance level is also at 2,845-2,850, marked by last Friday’s daily gap down of 2,842.20-2,851.98.

The broad stock market got close to its January’s record high recently, as investors’ sentiment improved following quarterly corporate earnings, economic data releases. The S&P 500 index traded within a relatively narrow trading range in the middle of the last week. Then it broke lower on Friday. Was it some medium-term downward reversal or just downward correction before another leg up? There are still two possible medium-term scenarios – bearish that will lead us towards the February low again, and the bullish one – breakout higher towards 3,000 mark. The latter one got very real recently. However, the S&P 500 index bounced off the resistance level marked by the January’s record high last week:

New Uptrend or Just Upward Correction?

Expectations before the opening of today’s trading session are positive, because the index futures contracts trade 0.5-0.8% higher vs. their yesterday’s closing prices. The European stock market indexes have gained 0.5-0.6% so far. Investors will wait for some economic data announcements today: Housing Starts, Building Permits, Philadelphia Fed Manufacturing Index, Initial Claims at 8:30 a.m. The broad stock market will probably open higher and retrace some of its yesterday’s decline. For now, it looks like an upward correction or a consolidation. There may be some more short-term uncertainty following the recent rout.