Stock Market: Optimistic Start of the Third Quarter, Short-term Uncertainty

The major U.S. stock market indexes gained 0.4-0.6% on Monday, as the beginning of the month and the third quarter brought more hope amongst investors who expect the positive impact of the forthcoming quarterly earnings releases season. However, in the second half of the day the market gradually lose value, ending the session well below the daily highs. The S&P500 index tested the 50% retracement level of its downward movement from the May 22 all-time high (session’s high at 1,626.61, vs. the retracement level at 1,623.76). The next important retracement level of this May-June correction is at 1,638.72 (61.8%, based on the Fibonacci Golden Ratio). Taking into account technical analysis, the market seems to be at an important point, just below the November-May upward trend line and the May-June correction’s downward trend line intersection, in the proximity of the above-mentioned Fibonacci retracement level, as we can see on the daily chart:

The expectations before the opening of today’s session are now slightly positive, but the situation may deteriorate due to the weak performance of the European stock markets. In the short-term the S&P500 futures contract (CFD) moved without a clear direction, fluctuating around the 1,600 level. The next resistance is at 1,620, set by the yesterday’s highs, and the support is still at 1,595-1,600. So, the 15-minute chart of the S&P500 CFD shows some short-term uncertainty:

Thank you,
Paul Rejczak