The U.S. stock market indexes lost 0.7-1.7% on Friday, as investors took short-term profits off the table following the recent rally. The S&P 500 index got back below the level of 2,800. The index was 11.5% below September the 21st record high of 2,940.91 on Monday two weeks ago. And now it trades 5.5% below the all-time high. The Dow Jones Industrial Average lost 0.8% and the Nasdaq Composite lost 1.7% on Friday.

The nearest important level of resistance of the S&P 500 index is now at around 2,795, marked by Friday’s daily gap down of 2,794.10-2,794.99. The next resistance level is at 2,815-2,820, marked by mid-October local high of 2,816.94. The resistance level is also at 2,860-2,865, marked by the previous local lows. On the other hand, the support level is at 2,755-2,775, marked by last week’s Wednesday’s daily gap up of 2,756.82-2,774.13 and Friday’s daily low.

The broad stock market extended its downtrend around two weeks ago, as the S&P 500 index fell closer to 2,600 mark. Then it bounced sharply and accelerated higher. On Wednesday we wrote that if the index breaks above 2,750, we could see more buying pressure. And the market got back above the broken long-term upward trend line. It was also back above 2,800 mark again. However, the index bounced off its mid-October local high. Will it resume the uptrend? Or was it just a correction before another leg down? The index is above its long-term upward trend line again:

Below 2,800 Mark

Expectations before the opening of today’s trading session are virtually flat, because the index futures contracts trade between -0.1% and +0.2% vs. their Friday’s closing prices. The European stock market indexes have lost 0.2-0.9% so far. There will be no new important economic data announcements today. The broad stock market will likely fluctuate below the level of 2,800 today. The market retraced some of its recent rally, however, there have been no confirmed negative signals so far.