THE BOTTOM LINE:
There wasn't a lot surprising in this past week's continued strong advance; weakness came early (in the week) per a short-term overbought market. It was buying all the way after that. The Russell 2000 (RUT), which has been a bellwether index at times in the past year, went to new highs and the Dow touched its prior top. RUT is back into its long-term uptrend channel, suggesting that profit expectations are still quite good for the smaller to medium cap companies.
I thought the market might meander a little more, on the way to new highs. New highs look quite likely for the Dow and the S&P; most likely Nasdaq is going to get pulled along.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) index has continued its strong advance of the prior week. The chart pattern hangs some in the balance whenever a rebound gets back to a prior top, but I rate the odds for new highs and another up leg as good.
SPX might struggle to churn through resistance in the area of prior highs between 1332 and 1344, but the index looks headed higher. I've noted a pivotal technical resistance up in the 1387 area given a tendency for recovery rallies to rally back to a previously broken up trendline.
I've noted resistances already. In terms of support I see it at 1320, extending to 1300. Given the recent strong upside momentum, it would be surprising to see a close below the 21 and 50-day moving averages again for awhile. Stay tuned for Q1 earnings reports to make for a lively April.
Bullishness of course rose this past week as seen in my 'trader sentiment' indicator above. Bullishness especially took off with this past week being the THIRD strong weekly advance. The third time is the charm and all that. Hey, it takes a while for people to rebuild their confidence!
Nothing yet in the numbers that smacks of any great extreme in buying; nothing like a buying frenzy. Look for that later in the month perhaps.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) is at a crossroads in a chart/technical sense as the index nears its prior highs. The odds of OEX topping again in the 599-602 area is there. I think however, this rally has 'legs' and there's another 20 point potential upside. Along with price projections, I pay attention to when the RSI is back up in its red zone so to speak; those 'overbought' levels are when I get friendlier to grabbing more of unrealized gains.
I've noted obvious resistance the prior highs already. A sign of a possible upside 'breakout' is for closes above 600 for more than 1-2 days. I also have an upside projection of resistance around 620 based on the OEX again reaching the price trajectory (rate of upside price change) that it was on from December into mid-February.
Key OEX support is at 590-587, extending to 580. A close below 580 would be a bearish development, especially if this extended into the following day.
DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU) average has the potential of getting back above its long-term up trendline and that's where I've noted immediate resistance, in the 12400 area. INDU has the potential also of a rally failure around current levels that would suggest a double top. I can't see the 'rally failure' scenario. Not with earnings season ahead and a pickup in business activity suggested by new hires.
Key near support comes in at 12200, then at 12000. I'd be surprised in the coming 2-3 weeks to see drop below 12000. If our expected support 'floor' gives way at 12000, another 200 points down is easily possible.
Resistance is in this 12400 area INDU was at or near hitting intraday for the last 3 trading sessions. I've projected a next possible resistance around 12600. My take on where we go from here: a breakout, not a 'breakdown'. There's potential this month for a move that at least touches or comes close to 13000. We're in a blue chip rally predominately in terms of the biggest capital flows.
NASDAQ COMPOSITE (COMP) INDEX, DAILY CHART:
The Nasdaq Composite (COMP) has strong upside momentum with a key test overhead coming up in terms of crossing resistance at the prior highs in the 2800 area and at the peak made before that, at 2840. The 2840 area is also potential resistance implied by a return to the prior up trendline, which when pierced, often 'becomes' a later technical resistance area.
Above 2840-2850, I have one price projection that's to 2925 and have highlighted it with a red down pointing arrow for expected resistance. I think there's another up leg ahead and a possible strong push for the 2900 area and above. Again, however I'm assuming a successful climb ABOVE 2850.
Support is at 2750, then at 2700. I'd be on a (downside) reversal alert with a COMP close below 2750; especially one that wasn't reversed in the following day's session.
NASDAQ 100 (NDX) DAILY CHART:
The Nasdaq 100 (NDX) continued its rebound this past week, with the caveat that the big cap tech index is lagging the S&P. Nevertheless my bullish projection is to at least a test of projected resistance around 2450 currently. Of course, there's still the hurtle of clearing the prior highs at 2375 and before that, the top made around 2400. I don't think we've seen this strong of a 3-week rally to have NDX to then just establish a double top or only make nominal new highs.
NDX looks to me to have upside potential to the 2500 area in April. First of course the prior highs have to be exceeded. My best guess is that Nasdaq continues to lag the S&P and it bumps up against its rising trendline resistance but doesn't break through. The red arrow noted for resistance at 2450, represents the current intersection at the previously 'broken' up trendline. We have to project a slightly rising technical resistance as the days go by based on the angle of this trendline.
Support I've pegged at 2320, extending to 2300. The 2250-2255 area is likely next support; my bullish expectations get ratcheted down if there's a drop below this level.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock symbol has reverted to "QQQ" from QQQQ.
QQQ appeared to be running into resistance as the stock approached 58. Nevertheless, the recent advance cleared some other technical resistance; the stock could drop back to 56.7 and still be 'holding' technical support; below that, not so much.
Key resistance is at the level of the prior highs at 58.3, then at 59. Major resistance starts to be seen above 60.
The Volume trend supports a further move higher. I think we'll see 60 or a bit above in the Q's this month.
RUSSELL 2000 (RUT) DAILY CHART:
The Russell 2000 (RUT) chart pattern, given the index's most recent push higher, has broken out to the upside, 'confirmed' that the intermediate trend is again UP and has regained (gotten back IN) its long-term bullish uptrend channel. The small to medium size companies of the Russell 2000 index are on the march again, suggesting the stocks are getting an earnings boost from a continuing pickup in the economy.
840 is now a key near-term support if RUT is to maintain a rate of further upside progress that MAINTAINS price levels within its prior major uptrend channel. Next support (below trendline support at 840) comes in around 820, extending to 810 and the 50-day moving average.
I've highlighted potential resistance areas as 860, then 880. RUT could get to the 900 area before the stocks in the index get pricey. This depends on the next batch of earnings, as to the 'pricy' aspect.
GOOD TRADING SUCCESS!