THE BOTTOM LINE:
I thought the PRIOR (mid-March) major index lows were bottoms for various reasons, especially in the indices retracing 'nominal' 38% retracements (Nas Composite) or a common 50 per cent retracement before rebounds occurred in SPX, OEX, INDU and NDX.
That was then. Subsequent rallies then fell apart. However, potential bottoms have again formed in the area of prior lows in the S&P, Dow and Nasdaq. RUT performed most bullishly, rebounding from an up trendline and Closing back above its 21-day Average.
You'll hear talk related to Dow Theory that the Transportation Average (TRAN) is not 'confirming' the Dow Industrial Average (INDU) in a new high which is bearish. It's true that TRAN did not accompany INDU to a new monthly Closing high and that could be construed as a bear market sell 'signal'. However, it's also true that TRAN could go on to ALSO make a new Monthly Closing high over the coming few months.
TRAN does look like it's topped out for now as it's made repeated weekly highs in the same area over an 18-week time span. A TRAN weekly Close below 8580 would be bearish; until then I'm not drawing any conclusions about a possible start of a bear market. Friday's TRAN Close: 8700.
The other technical dynamic is another decline in bullish trader sentiment. Certain levels of bearishness/low bullish opinion tend to be associated with market bottoms. Stay tuned on this. In a contrary opinion sense this pattern forms the seeds of its opposite. Traders tend to be bearish at bottoms and bullish at tops. I'm not giving up on upside potential given the chart patterns seen below.
The S&P 500 Volatility Index (VIX):
The S&P 500 volatility Index fell to support in the 13 area, then rebounded. I consider VIX to be in a support zone at 12-13.
I suggested last week to buy VIX calls in the 12 area and to exit in the 16-17 area. Intraday, the VIX Index got up to 16.6 then fell back to 15.
No further recommendations. VIX looks to be in 'whip-saw' mode and a prolonged trend may not be in the cards any time soon.
The VIX DAILY chart:
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX) DAILY CHART:
Speaking of being whip-sawed, the S&P 500 did not pierce its prior highs in the 2120 area, then saw heavy selling and buyers retreating by mid-week. This brought SPX back to the area of its prior lows; subsequent lows then formed over Thursday/Friday a bit above prior SPX bottom in the 2040 area.
Possible bullish price action not withstanding, CBOE equities put volumes increased relative to calls and pushed my CPRATIO ('sentiment') line lower into an initial bullish 'oversold' reading as noted with the green up arrow on the CPRATIO line. A personal favorite upside trend reversal 'set up' is when prices hold at or above prior lows, with traders turning more bearish.
Bullish action would be seen with a sustained move back above 2080 and the 21-day moving average. Next resistance is highlighted at 2100. Next up resistance wise are prior highs around 2120.
Support/buying interest in SPX looks like it would develop on pullbacks into the 2040-2033 zone. Fairly major support begins at 2020, extending to 2000-1980.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) was bullish in my opinion a week ago but I also assumed the Index would hold above its 21-day moving average. NOT! When OEX retreated back below 920, heavy selling came in and buyers were scarce given the current market jitters. One of which, I consider meaningful; i.e., the trouble that manufacturers here have or could increasing have with a strong dollar.
I did well myself last time the Euro got well under a buck when I bought property in Europe then sold years later. The fact the Euro was then worth $1.30 was an added plus! I consider income derived from the UK or Europe to be a good currency 'hedge' but I worked out of London for several years and dealt with currency trading in my work so have the feel for it I suppose.
OEX resistance is seen in the 920 area with pivotal resistance at the 930-932. I should note here that 910 may offer near resistance. Near technical/chart support looks to come in at 900-898, extending to 893-890.
I anticipate OEX having upside potential from current levels but it also seems premature to suggest bullish strategies just yet given an unsettled Market, even though a potential double bottom is a potent bullish pattern.
THE DOW 30 INDUSTRIAL AVERAGE (INDU); DAILY CHART:
The Dow 30 (INDU) Average reversed lower after failing to pierce 18200 resistance. Now, NEAR resistance is highlighted in the 18000 area.
INDU also found recent support/buying interest back at its prior lows minus one brief dip to 17600. Chart support is highlighted at 17600, then at 17500.
Still bullish Dow stock patterns don't add up currently to more than about a third of the 30; i.e., stocks without the sharp retreats that others have seen over the past 1-2 weeks. Bullish longer-range uptrends remain mostly intact in: AAPL, DIS, GS, HD, JPM, MMM, NKE, PFE, TRV, UNH, and V.
I wrote last week that "technical resistance is suggested at the prior Dow intraday highs in the 18245-18288 zone. Assuming a decisive upside penetration above 18288-18300, a next advance could carry to the 18500 area which would begin fairly major resistance." A 18500 longer range upside target still looks possible but pivotal resistance is clear at 18200-18288.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) is mixed. While COMP rallied to a new high above 5000, this advance quickly reversed lower. The first Close below 5000 was a first warning of the sharp fall that followed. That said the decline didn't carry farther than the prior lows in the 4845 area at least not by much and only briefly.
I've noted support at 4850, extending to 4810. Overhead resistance is seen in the area of the 21-day moving average or 4950 currently. Key next resistance is again at, what else, but 5000 again. I continue to see COMP as capable of a further up leg but 5000 is a tough area to climb above for a sustained period. Some backing and filling may be ahead before another potential assault of 5000.
I'll note the same potential bullish 'contrary' influence of what I consider to be the start of extreme bearishness represented with my CPRATIO line and is highlighted with the green up arrow there; my same sentiment indicator displayed with the S&P 500 chart.
NASDAQ 100 (NDX); DAILY CHART:
The big cap Nas 100 (NDX) is mixed with a similar reason. Only in the case of the big cap Nas 100 there was not a move to a new high, but rather a potential double top. I believe this may be a temporary top but it's an important top nevertheless.
The key bullish influence in the chart is the potential second bottom made in the same area as was seen a couple of weeks prior. Assuming support in the 4300-4289 area continues to hold up, there potential for a re-test of resistance at 4400 or the area of the 21-day moving average. Next resistance then is highlighted at 4450, extending to the 4484 area.
Below 4300-4290 near support, I highlighted support at 4225 on the daily chart. But, we should consider next lower support as 4250-4225.
NDX might settle into a 4450-4290 trading range before it can bust out of this relatively tight range. A breakout could be to the downside as well as the upside, but I don't see tech selling to be that great. If AAPL saw a decisive downside penetration of 120-116, I'd believe in a possible sizable next down 'leg' ahead.
The NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
QQQ has the same 'mixed' pattern as the underlying NDX chart of course. A potential double bottom has set up but a move below 104-103.4 would call that into question.
Overhead resistance is at 107 and the 21-day moving average; next resistance is at 108, extending to 109-109.4
Volume picked up on the sell off but the On Balance Volume line has turned up, which might signal a turnaround but more action is needed to clarify the pattern.
I liked the buy side in QQQ stock in the 50% retracement area and still like this zone as a place to look at taking on bullish strategies. A Close below 103.4 would kick me out of any such trades however.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) pattern is bullish, notwithstanding the sell off from new highs above 1260. RUT's pullback was to an emerging up trendline and the most recent Close is back above resistance implied by the late-February highs.
The longer that RUT can trade above 1240, establishing a possible support base in this area, all looks ok for betting on some further upside in the Russell.
I've highlighted chart/technical support at 1220, with fairly major support noted in the low-1200 area. Near resistance is at 1260, extending to 1268 and next in the 1280 area.
GOOD TRADING SUCCESS!