THE BOTTOM LINE:
This past week's high-level, but low-volume, consolidation is nominally bullish but a more normal participation (Volume) period ahead will judge which way next. Low bullish sentiment continues to be a bullish plus.
My charts are updated along with some re-think of support and resistance levels, but my commentary is basically unchanged from last week. How could it not be, as from a technical or chart-indicator perspective, nothing much has changed as price levels have not materially changed.
I make a point to talk about the relative shallowness, a Fibonacci 38%, of the recent pullback from the sharp run up from the late-September bottom. Why? Simply that a pullback of 38% is considered a 'minimal' retracement of a prior upswing. A quick completion of a correction of a minimal percent followed by another rally is generally bullish action.
Suggesting new highs for this move to come as much as anything is that traders are not 'believing' in the rallies much, not yet, as can be seen in my CPRATIO indicator as seen on the SPX or COMP charts.
I'd repeat again here the significance in the Nasdaq 100 (NDX) being within striking distance its all-time HIGH at 4816 (NDX Friday Close: 4680, almost unchanged from 4686 from the prior week). Prior major historical highs are big milestones. A decisive upside penetration of 4800-4825 and, over time, consolidation and 'establishment' of a support floor around 4800 suggests upside potential to 5000;e.g., by the end of March. NDX is slowing down in its RATE of upside momentum so 5000 from current levels would be a major target and major potential resistance.
[My usual chart highlights for resistance levels are red down arrows; my highlights for support areas are the green up arrows.]
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX) DAILY CHART:
The S&P 500 (SPX) chart is mixed to bullish. Bullish in the strength and then renewed strength in the recovery rally dating from the late-September low and its double bottom. A 'mixed' picture is seen in that SPX remains below 2130, the top end of a multimonth trading range.
Near resistance is seen just over 2100. Next assumed resistance is at 2135, the prior multimonth high. Above 2135 there's further upside potential to near 2200. Near support is this week is bumped up to 2060, with anticipated next support coming in around 2020.
I continue to make a point of lackluster bullishness in the face of the upside price bias of recent weeks is seen with my CPRATIO indicator. This aspect of trader sentiment, where rises in bullishness don't match rising stock PRICES of recent weeks has, in a contrary opinion sense, BULLISH implications. The 13-day Relative Strength Index (RSI) fell on the recent correction to a more 'neutral' mid-range reading around 40 and which helped 'set up' the rebound so to speak.
The S&P 100 (OEX) INDEX DAILY CHART
The big cap S&P 100 (OEX) chart resumed its bullish advance as prices rebounded from OEX's up trendline after completion of a 'minimal' downside retracement, but the Index is now drifting sideways just above support implied by its 21-day moving average.
Resistance is seen at 940, extending to the prior 947 high. If a new high is made, there's upside potential to 980 over time.
Near support is highlighted at 920-915, with next support at the milestone 900 level. Just as 980 may be a fairly major resistance, 880 looks to be fairly major support.
No change in my view to look for a move to new highs in OEX.
THE DOW 30 INDUSTRIAL AVERAGE (INDU); DAILY CHART:
The Dow 30 (INDU) saw a recovery rally and upside turnaround fairly quickly after INDU's 'minimal' 38 percent Fibonacci retracement. The fact that the Dow also has had a relatively 'shallow' correction, before taking off again, is a bullish plus.
Key support is seen in the 17600 area, at the Dow's 200-day moving average, with a next area of buying interest likely if 17500 was seen.
On the 'mixed' side of technical/chart aspects, the sluggish Dow has further to go than the S&P to break out above ITS prior stair-step highs; starting at the 18350 top, then 18200-18137, down to the 18000 area. Keeping bullish upside momentum going near-term would be seen on a move above 18000. Next up would be important targets and potential resistance points at 18200, then the prior all-time high at 18350.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite's (COMP) recent pullback to 4900 resulted to a 'minimal' 38% Fibonacci percent retracement of COMP's prior 600+ point upswing, before buying again took the Index higher. While volume and price momentum have slowed ahead of, and into, the past holiday-shortened trading week, I continue to see potential ahead for a retest of the prior 5163 COMP high, and on to a challenge of its 5232 July top; if 5232 is pierced further upside potential and possible next resistance is to 5300.
Near support is at 5050, extending to the pivotal 5000 level. Next technical support is seen at the recent 4900 low.
Bullishness, in the face of a strong recovery rally and 'minimal' retracement has been low. When this changes to high and prolonged bullishness, I become more wary about how much higher prices can get. See my 'CPRATIO' sentiment indicator at bottom of the COMP chart. A last key CPRATIO low highlighted by the green up arrow was a strong indicator for/of a bottom.
NASDAQ 100 (NDX); DAILY CHART:
The daily NDX chart is through Friday 11/27; my end of week commentary (on 11/28) is mostly unchanged from last week:
The Nasdaq 100 (NDX) pattern is bullish enough to suggest that the recent renewed rally could test the all-time (March, 2000) peak at 4816. Immediate resistance comes in at 4737 but I see that level being pierced and 4800-4816 being tested as the pivotal resistance.
Near support still seen at 4600, with especially key support that came in around 4500; this dip was important in that it 'showed' support at the low end of the big prior upside price gap.
Chart gaps often get 'filled in' later but the LOW end of gaps also often sees support/buying interest coming in there.
I see little to stop the big cap Nasdaq from clearing 4800 for a time but long-term chart resistance is seen around 4875-4900 between now and year-end. On a longer-term, such as out to end-Q1 (March) a move to 5000 is possible.
The NASDAQ 100 Tracking Stock (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) rebounded from the 110 area, support implied by the low end of an upside price gap formed when prices leaped from below 110 to a 112 low the following trading session. A common bullish pattern is a subsequent rebound AFTER a prior upside chart gap is 'filled in'; i.e., prices FULLY back track into the or low end of the price gap, whereupon the index then reverses higher.
Support is highlighted at 112, then at 110 where the most recent rally began, after a scant 38% retracement.
Resistance is seen at the prior 115 high which I think will be re-tested and possibly pierced. Next resistance would then be anticipated in the 117 area.
Daily trade volume has been declining since mid-November whereas the On Balance Volume (OBV) line mostly has been trending higher, which suggests a bullish volume aspect to the bullish chart.
The RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 Index (RUT) saw a minor upside chart breakout in that the Index Closed above prior highs at 1200. Next resistance is highlighted at 1220, extending to 1240 and prior highs in that area.
Near RUT support is seen at 1180 this week, with next lower technical support anticipated at 1160. A key support then comes again around 1140, which looks solidly bullish after RUT completed a 50% retracement (of its October advance) at that level.
GOOD TRADING SUCCESS!