S&P 500 In An Uncharted Territory, But Is Sky The Limit?

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The S&P 500 retraced its late last week’s declines yesterday and it went closer to the 4,800 level again. Will it reach the new record high today?

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The broad stock market index gained 0.64% on Monday, Jan. 3, as it retraced most of the recent decline from last Thursday’s record high of 4,808.93. Yesterday the index fell to the local low of 4,758.17, before advancing almost 40 points. The S&P 500 index remains way above the local highs from November and December. Stocks broke above the consolidation and we had a quick Santa Claus rally. The broad stock market’s gauge continues to trade within a short-term consolidation. For now, it looks like a relatively flat correction within an uptrend.

On Dec. 3 the index fell to the local low of 4,495.12 and it was 5.24% below the previous record high. So it was a pretty mild downward correction or just a consolidation following last year’s advances.

The nearest important resistance level remains at around 4,800-4,810. On the other hand, the support level is at 4,740-4,750, marked by the previous highs. Recently the S&P 500 broke above its two-month long consolidation, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

S&P 500

Apple's Market Cap Tops $3 Trillion

Apple Inc (NASDAQ:AAPL) stock reached the new record high of $182.88 yesterday, as it broke slightly above the Dec. 13 high of $182.13. The stock remains above its two-month long upward trend line. There have been no confirmed negative signals so far, however, the market may be trading within a medium-term topping pattern. It’s getting very hard to fundamentally justify the Apple’s current market capitalization of around $3 trillion.



The S&P 500 index is expected to open 0.3% higher this morning, but we may see some short-term uncertainty and a further consolidation along the 4,800 level. There have been no confirmed negative signals so far.

Here’s the breakdown:

  • The S&P 500 will likely extend its short-term consolidation along the 4,800 level.
  • In our opinion no positions are currently justified from the risk/reward point of view.

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Thank you.

Paul Rejczak,

Stock Trading Strategist

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