THE BOTTOM LINE:
The S&P 500 is seeing a strong line of resistance at 1850, which bears watching, but Nasdaq rules the roost still. What's 16-19 billion from Facebook for an app you've likely never heard of!
Well, actually I did see a supposed voice mail from "WhatsApp" in my junk mail box and I curiously, not cautiously, opened it to find my virus guard warning me away from it. Duh, I should have known cause it's a TEXT app only. This application has caught on big time, especially in Europe where the wireless carriers charge big time for text messages. Our intrepid AT&T and Verizon have made billions on our teens especially charging lots for text heavy users and now new plans have unlimited text messaging and competition in ACTION. Facebook probably sees things I don't, such as 'eyeballs' are the be all and end all. It takes a visionary in this world of brave new tech to see ahead.
The Composite went to new highs and that's what I find important. The S&P and even more so, the Dow, are going to need to get through this next few weeks and obtain more insights on earnings in the real world before it will forge ahead and move higher it should do. February-March tends to be seasonally weak or at least less likely to surge like December-January can.
I think we have to expect higher prices over the coming weeks but cautious near-term in terms of taking on overly much in the way of bullish positions. Buy dips only. Runaway past moves had the Fed wind at our backs but they see the economy taking over for them. Hey, back to a 'normal' market, driven by earnings. Imagine that!
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The recent S&P 500 (SPX) index is bullish but stalled at a what has proved so far to be a strong line of resistance at 1850. Technically, as in 'technical' analysis, I'd have to say SPX is showing a minor triple top. However, triple tops also tend to be rare in the major indices; somewhat more common in stocks and commodities. And, of course, we can't look at one index in isolation when we have the 'other' (Nasdaq) Market forging ahead.
Seasonally, February-March tend to be consolidation periods for prior bullish moves from fall into year end and into the new year. A weekly Close below 1800 would be bearish but as long as the prior low is not pierced, the chart remains bullish.
Pivotal resistance is obviously at 1850, with next anticipated resistance at 1880, then at the upper channel line, currently intersecting just over 1900.
Indicators are mixed. RSI shows the recently faltering upside momentum and my bullish/bearish 'sentiment' model suggests rising bullishness, but moderate bullishness. No caution to the wind here, but the wind blows higher in the bigger picture and that's the advice I have for myself and others.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart is bullish and the recent back and forth sideways type movement looks like a bull flag consolidation currently. A move below 800 on a Closing basis is mildly bearish for the next 1-2 weeks. Pivotal support implied by OEX's up trendline comes in around 780 currently and as long as there's no weekly Close below that trendline, the chart remains bullish on an intermediate and long-term basis.
Key near resistance is at 812-814, with next resistance at the prior minor double top. If there's a decisive upside penetration of 824, 835 is a next target in my estimation, with potential then for the Index to get back up to the upper resistance end of its broad uptrend price channel.
I would watch the 50-day moving average in the near-term. If OEX holds above it for the most part, it's a bullish sign. If there's a slide below this key average, look for what happens at the 21-day average. Bullish positions look favorable on dips into the 790-780 zone.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow (INDU) chart looks a lot like the S&P 100 seen above as the recent sideways narrow-range move looks like a possible bull flat. INDU is maybe more clear cut as to near support close byu at 16000; next support comes in at 15800. Bullish positions look favorable in this area and even down to closer to 15500 with an exit just below the prior intraday low.
Currently I see better potential for a break out move above 16200 than to much below 16000, but I'm willing to wait and see if 16000 holds up. Resistance above recent highs at 16200 comes in next at 16500.
CAT is in a recovery move; DD is strong; DIS is bullish, as is JPM and MRK. MSFT looks to be in a bullish consolidation; UTX and V have bullish charts. Not enough here overall with the 30 stocks to suggest a power move higher but nothing looking all that bearish in the mix either.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) chart is bullish and unlike the S&P side of the aisle, COMP has gone on to make a new high for the current move.
4280 is near resistance in COMP, with next resistance not that far overhead, at the upper channel line, currently intersecting around 4333. I don't see major-major upside potential in the near-term; not like what it was when the Index was at the LOW end of its uptrend channel.
Near support is suggested in the 4200 area, then at 4150 at the 21-day moving average. This average has been a good 'dividing line', with trade above it bullish, trade below it bearish on a near-term basis. Fairly major support is suggested at the up trendline, currently intersecting at 4030.
Slightly rising bullishness suggested by the call to put daily volume ratios in CBOE equities options is, we can assume, driven by the Nasdaq as big deals are still getting done which keeps investor interest. Hey, I love to read about the latest tech-savvy billionaire who had a vision in the internet space.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) chart is bullish; the chart looks most bullish short-term with NDX continuing to trade above its prior 3635 high.
Pivotal near support is at 3600, extending to 3570. A Closing dip below the 21-day moving average would suggest waning upside momentum. Fairly major support comes in around 3500, at NDX's up trendline.
On the prior note, I'd consider it an opportunity if I could take on bullish positions at the LOW end of the Index's broad uptrend channel again but I doubt that I'm going to have a second opportunity to buy another dip to the up trendline. It seems more likely that there will be a move above near resistance at 3685-3700 ahead and then perhaps, up to 3745-3750.
A take-over focus or speculation ahead should keep the bulls enthusiastic as traders speculate on how much cash Google or Microsoft could put to work in some below the radar Nasdaq stock that has the next great idea to mint billionaires. It keeps the excitement going in the big cap Nasdaq 100 as down scale Walmart or even up scale Nordstrom's, are struggling over on the retail 'old-economy' universe. Ah, the American dream of the next new thing!
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The QQQ chart is bullish, especially so with the recent move to a new high for the current move; a move which started at the low end of QQQ's uptrend channel or at QQQ's up trendline.
Near support is at 89.4, extending to 89.0; next lower support then comes in at 88 even, extending to 87.45, at the current intersection of the Q's 21-day moving average.
Near resistance is seen at 90.4, then at the upper price channel, intersecting in the 91.5 area currently.
Volume is on the low side recently, which is supportively bullish, since big volume spikes tend to be bearish as they most often come on sell offs and breaking of support levels as bullish holders of this ETF stock race for the exit.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) is bullish as it tracks Nasdaq higher but not to new highs like Nasdaq, at least not yet for the current move. Pivotal resistance comes in at 1180-1182; immediate overhead resistance is at 1170.
Key near support is at 1140, extending to 1130. I didn't highlight even closer-by support at 1150-1148; holding this area would keep the chart in a 'maximum' bullish pattern.
RUT will tend to follow the Nasdaq, but not lead it. The Russell will tend to lead the S&P however.
On a longer-term basis, RUT would appear to have potential to again reach the top end of its broad and well-defined multimonth uptrend channel, which is a current top most target, cum 'resistance', at 1208, with this upper channel line rising fairly steeply over time.
GOOD TRADING SUCCESS!