THE BOTTOM LINE -
The S&P 500 (SPX) fell back below its major weekly down trendline dating from the 2000 all-time high. The Dow 30 (INDU) retreated from resistance implied by the previously broken up trendline (the "kiss of death" trendline) at 11,000, consistent with the bearish upward sloping wedge that will be highlighted on its chart.
The negative influence for the market of rising oil prices remains, as April crude oil futures consolidated above $53, its prior high, which could be predictive for another push higher -
The Nasdaq indices never made it back above key resistance implied by prior highs (Nasdaq Composite) or by the previous downside price gap in the Nasdaq 100 (NDX), so was a put buy candidate at the top of its recent rally.
The rebound and positive influence for tech stocks provided by the Semiconductor Index (SOX) January-March advance was ended recently when the SOX made a double top and reversed at resistance implied by a return to its prior up trendline -
MARKET NEWS and INFLUENCES -
INDEX TRADER - MIDWEEK UPDATES
MAJOR STOCK INDEX COMMENTARIES/OUTLOOK
S&P 500 Index (SPX) - Daily chart:
SPX still looks to be basically in a broad (sideways) trading range, especially if the index drops under (pierces) its up trendline highlighted at the green up arrow.
A close below 1200-1198 would suggest that the S&P 500 would retest its prior low around 1184. A move below the prior 1184 low would suggest potential to reach the 1175-1170 area again.
Conversely, ability to hold above 1198-1200 would instead suggest upside potential in SPX back to 1215 or so, perhaps to 1120-1125 again. However, I consider it doubtful that there will be a new high made in the coming 1-2 weeks.
S&P 100 Index (OEX) - Daily chart:
Prior to this past week I pegged key resistance in the S&P 100 (OEX) as being at the previously broken up trendline intersecting around 585 per the chart below. Not for nothing do I sometimes describe this as the "kiss of death" trendline for its rally stopping potential.
Now what? The close under the minor January-February up trendline noted at the green up arrow, was a bearish sign - an even more key support is implied by the prior low at 567. When (and only when) an Index or stock gets into a pattern of lower downswing lows, at least an interim trend reversal is suggested.
If OEX can get back above the pivotal 580 level and stay there, a possible new high could come later, maybe even to the 600 area. I would close out puts on a close over 580. A rebound back to the 580 area but not above it, would look like an opportunity to buy OEX puts, with an objective to 565-567.
My Call to Put equities option indicator has hardly moved in the past week. I think that this reflects a more neutral outlook on the market. The bulls have gotten cautious but trader sentiment has not turned decidedly bearish either - when we get this kind of low reading again, it may well precede a next bottom.
Dow 30 Average (INDU) - Daily chart:
I noted last week, the 11,000 level as key technical resistance in the Dow 30 (INDU). I also indicated my doubt that INDU would churn through this area easily.
In fact a rather steep pullback has taken INDU back below the high made before this latest move. This kind of reversal action is bearish, but there would not be a confirmed downtrend unless the prior low at 10,368 was exceeded.
There is a bearish pattern traced out on the Dow daily chart below by use of the two dashed blue lines - that of a rising "wedge". A close under 10,700, which would pierce the lower rising trendline at the green arrow, would suggest that a further substantial fall was possible, such as back to the 10,400-10,350 area or lower.
The 21-day stochastic has been a reliable indicator for tops and bottoms in the Dow 30, but sometimes not until a second or third high or low is made at the extremes.
Once there is a fall from the upper extreme, there has been a tendency for a continued decline on balance until there is a reading in the lower oversold area of the Stochastic Indicator.
Nasdaq Composite (COMP) Index - Daily chart:
2100-2105 in the Nasdaq Composite (COMP) was the key resistance and the rally reversed right after making a high at 2100. COMP still looks locked in a narrow trading range.
I've noted the line of support, at the green up arrow, as being at 2022, at the most recent low. If 2022 is pierced, the prior low at 2006 becomes a possible next downside target.
Support in the 2000 area is implied by the 200-day moving average. Difficult to say how far the Nasdaq will sink here and if it will sink under the pivotal 2000 level - the index may instead remain locked in a relatively tight price range.
Nasdaq 100 (NDX) Index - Daily:
The rally failure in the 1550 area for the Nasdaq 100 (NDX), resistance implied by the top end of a trading range of some weeks - also the top end of the January downside price gap - was not surprising. There were not many key Nasdaq stocks with strongly bullish patterns. The two highs of the past week also establish the 3 points that enable drawing a trendline - in this case, a down trendline.
Per my comments of last week, a close above 1550 and an ability to hold this area on subsequent pullbacks, was not achieved - therefore, a new up leg could be ruled out.
For those who bought NDX puts in the 1550 resistance area, I suggest exit if further declines hold in the 1490-1500 area.
The low end of NDX's trading range of recent weeks, around 1490, is near support. There may not be much upside potential currently, but this does not mean that there is going to be a substantial decline either. NDX could be locked in its relatively narrow trading range for some time longer.
However, if 1490 is pierced, a downside objective to 1450 becomes a possible next target.
Nasdaq 100 tracking Stock (QQQ) Daily chart:
QQQQ again offered a shorting opportunity in the 38 area - whether the NDX tracking stock has downside potential to more than 37, or 36.70 again, is another question.
A close or better two closes in a row below 36.70, at the low end of its multiweek range, suggests a possible next objective to around 35.50.
Daily trading volume rose over the course of the decline, but the On Balance Volume (OBV) line was falling and showing the direction that the trend would take.
SPECIAL NOTE -
Good Trading Success!