The U.S. stock market indexes lost 0.4-0.9% on Wednesday, retracing some of their Tuesday’s move up, as investors’ sentiment worsened again following Syrian conflict escalation worries, among others. The S&P 500 index is currently trading 8.0% below its January 26 record high of 2,872.87. The Dow Jones Industrial Average lost 0.9%, and the technology Nasdaq Composite lost just 0.4%, as it was relatively stronger than the broad stock market yesterday.
The nearest important level of resistance of the S&P 500 index remains at around 2,665-2,675, marked by recent local highs. The resistance level is also at 2,695-2,710, marked by March 22 daily gap down of 2,695.68-2,709.79. On the other hand, level of support is at 2,635-2,640, marked by local lows. The next support level is at 2,600-2,610, marked by Monday’s daily low, among others.
We can see that stocks reversed their medium-term upward course following whole retracement of January euphoria rally. Then the market bounced off its almost year-long medium-term upward trend line, and it retraced more than 61.8% of the sell-off within a few days of trading. The uptrend reversed in the middle of March, and stocks retraced almost all of their February – March rebound. The index got back down to its medium-term upward trend line. There are still two possible future scenarios. The bearish one, leading us to February low or lower after breaking below medium-term upward trend line, and bullish: medium-term double top pattern or breakout higher. Last Friday’s sell-off made the bearish case more likely, but then the market got back higher again. The broad stock market index continues to trade within a short-term consolidation along the above-mentioned upward trend line:
Will Earnings Releases Outweigh Negative News?
The index futures contracts are trading 0.4-0.5% higher vs. their Wednesday’s closing prices right now. So, expectations before the opening of today’s trading session are positive. The main European stock market indexes have gained 0.1-0.3% so far. Will stocks take another attempt at breaking above their short-term consolidation? It may happen if sentiment further improves ahead of coming quarterly earnings releases. Investors will also wait for the Initial Claims number release at 8:30 a.m.