THE BOTTOM LINE:
The Dow 30 (INDU) went to a new monthly closing all-time high which is an important milestone. The Dow Transports were already at new monthly highs and the interaction of INDU and TRAN says 'all-clear' as to a Primary Bull Market.
I wondered WHAT would push stocks higher in a sizable new up leg. Bullish news for stocks on a 2013 horizon was the political truce on further self-destruct impasses on raising the debt ceiling or on things that might shut down the government. When the leadership of the two parties said ok to such a truce, there's an 'all-clear' on the political war for enough time for businesses and individuals to spend based on fiscal stability.
I look for a continued uptrend in the S&P and the Dow, with lagging pickups in tech stocks and the Nasdaq. Money is flowing into stock mutual funds again, nervous trader types are not all that bullish and amid these low expectations I anticipate some further upside into spring and a strong seasonal time.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) has seen strong buying interest as SPX fell toward the low end of its broad uptrend channel. 1500 looks like an area to have bought or buy again, with expectations of a move back to near resistance in the 1530 area with some promise of a break out to the top end of SPX's uptrend channel; suggesting potential to 1560 and higher over time. Absent a decisive downside penetration of support at 1490-1480, I'm bullish on the S&P. If there was such a dip I've noted next support at 1460.
The RSI is back to neutral and I don't expect a move to an 'oversold', which isn't that common with bullish price trends such as we're in currently. Bullish sentiment is low relative to the chart pattern. Go with the bullish chart.
Bullish sentiment figures are on a downward trend as is apparent with the blue 5-day moving average of the CPRATIO line above. With the S&P acting very buoyant at the lower end of its uptrend channel, the downward trend in bullish expectations or 'sentiment' is unwarranted in my view. Many rallies begin on low expectations for the upside.
S&P 100 (OEX) INDEX; DAILY CHART
The bullish pattern seen with the S&P 100 (OEX) chart is compared on a close-only line chart basis, topmost below, with a the standard 'bar' chart below that. It's helpful at times to sometimes compare how prices ended the day (a close-only line chart) to the intraday price range shown by candle charts and what's called an Open, High, Low, Close (OHLC) or standard bar chart. Charles Dow in his time was only concerned with the closing price as value is based on the end-day price.
Both chart types, slightly different ways of depicting the current price trend, are bullish. The line chart looking the most bullish to me. RSI is in a mid-range neutral which is about as far as a strong bull trend gets to oversold.
670-675 is key support (next support: 640) and 690 key resistance, extending to 697-700. A move to new highs such as to the 700 area looks more likely than another downswing.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU) is leading the way in this bull market of late as it broke out above 14000 after a brief dip to 13800; strong buying was seen on the panic driven dip to 13800; prices not seen for long as buyers were back in strongly below 13900.
INDU's chart is bullish. I noted last week of a third of the 30 Dow stocks being in powerful uptrends. Immediate overhead resistance is at 14100, but INDU looks like it can blow through that on the way to the 14200 area, and probably then still higher such as again to the upper end of the bull channel; see chart.
Pivotal technical support is at 13800, with long-term support coming in around 13600.
An important aspect of Charles Dow's ideas was that new monthly highs made in either his Transportation Average (TRAN) or the Dow Industrials (INDU) should be later 'confirmed' by the other Average also going to new monthly highs and providing evidence a bull market was continuing. INDU just went to a new all-time monthly high, finally following TRAN in that feat. A nice bullish 'all clear' signal to investors and you have likely noticed that stock mutual funds are getting more and more money coming back into them.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) is bullish as long as COMP continues to hold the low end of its uptrend channel. This means key must-hold support relative to a bullish chart is at 3240 on a closing basis. I look for a move above to and above 3200 with a possible test of 3250 on the way to 3300.
Proving my bullish case wrong is a couple of back to back closes below 3100; in which case 3020-3000 might be seen by COMP.
I've gotten interested again in Apple (AAPL) as its weekly chart has traced out a bullish downward sloping wedge pattern. A strong rebound in AAPL would fuel a strong rise in COMP. Stay tuned.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) chart has held key technical support in the 2700 area, at the low end of NDX's bullish uptrend channel. The Index is still in a relatively narrow 2700-2780 trading range which makes the near-term picture 'mixed'.
From current levels I'm anticipating a move higher. It appears that the lower end of the uptrend channel has been tested sufficiently as support. As long as 2700 continues to hold up as a lower support floor, I'm looking for another move up toward at least the middle of the channel if not toward the upper end.
Another element that makes for a bullish technical picture: while NDX has held the low end of its bullish channel, a bullish plus, traders are only mildly bullish. On a contrary option basis, low optimism on the bullish side when there's a positive chart (positive upward slope) is in itself bullish.
Initial support is seen at 2715 extending to 2690, with next lower support in the 2660 area. Resistance is at 2780, extending to 2815, then 2850 and the top end of NDX's highlighted uptrend channel. We're at a key juncture technically as the index needs to work higher to keep its bullish pattern. I go with the bullish Dow and S&P and figure tech will move higher too.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) is bullish so long as the low end of the Q's uptrend channel continues to show up as support, meaning buying came in on each dip to this area. Funny about that but the chart looks bullish so far but next up has to be a move above 68.2 to prove a bullish case.
I lean to a bullish outcome of what I'm seeing here as prices bounce from trendline support and that's the lowest risk area in terms of a trade exit point. In other words buy the dip to the trendline, risk to just under it and if the bull trend is true, there's a possible trampoline effect to 69-70. Strong up trendlines are like springboards to a next up leg.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) Index looks to be a buy in the 900 area, risking to a close below 880 and with a projected upside potential to 932 and higher, such as back to the top end of RUT's bullish uptrend price channel currently intersecting in the 953-960 area at least in the coming week.
GOOD TRADING SUCCESS!