THE BOTTOM LINE:
The market this past week has been in a congestion zone or a narrow price range where buying and selling have been in relative balance. The big cap S&P 100 (OEX), the Dow 30 (INDU) and the Nas 100 (NDX) are trading above support suggested by their 200-day moving averages.
ALL the major indexes held at or above support implied by their 21-day moving averages and their previously broken up trendlines. I'd rate the likelihood of some further gains as greater than another downturn provided that the aforementioned technical support continues to hold up.
Further comments on the individual indexes are seen below with the relevant charts.
INDUSTRY GROUP INDEXES:
No noteworthy technical developments to report with the CBOE Oil Index (OIX), Philly Gold & Silver Index (XAU), CBOE S&P Bank sector Index (BIX) and the Philly Semiconductor Index (SOX). The SOX trading range is narrowing in within the apex of a triangle formation. A fall below SOX 345 would be a bearish break, whereas a sustained advance above 383 suggests a bullish chart breakout; Friday SOX close: 375.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) chart is bullish as price dips this past week held above technical support implied by the previously broken up trendline. Generally, the subsequent dip after the last spurt higher hasn't given back much of those gains, which suggests that we're seeing a consolidation ahead of another attempt to retest resistance at 1290-1300.
A more bearish chart is seen if SPX can't hold above 1220 support. 1200 looks like a next support floor. 1200-1220 was the prior top end of the Aug-Sept price range and this area has 'become' new support.
The 200-day moving average has been 'acting as' immediate overhead resistance; this average currently stands at 1263. Next resistance has to be assumed for the prior 1292 intraday high; the prior Closing high was 1285. Fairly major resistance may come into play around 1300.
Bullish sentiment is relatively low in the face of the major indexes holding most of recent gains. This is a bullish plus in a contrary opinion sense.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) is bullish in its pattern as prices have consolidated above 560, near the high end of its last sharp run up in late-November/early-December. Moreover, OEX managed to end the week above its 200-day moving average, which was a bullish plus.
The 570-573 area is immediate overhead resistance which needs to be pierced to suggest that the prior 580 high will get retested. Fairly major resistance then is seen in the 600 area.
Key support is at 550-553. The chart would start looking bearish with OEX under 550. If so, next support is at 540.
I'm anticipating a move higher. The most bullish chart interpretation suggests that OEX could reach the 600 area again, but if so I don't see the index getting above this resistance anytime soon.
DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow has a bullish chart as strong gains made late last month into early-December have mostly been held. INDU dipped to near support in the 12000 area but held this easily and stayed above its 200-day moving average. I've pegged near support at 12000-11950 with next support at 11800. The chart looks most bullish if the Average holds above 12000-11950.
Supporting the view that the Dow can push still higher are bullish charts seen with AXP, BA, CAT, CSCO, CVX, DIS, GE, HD, HPQ, IBM, INTC, KFT, MCD, MMM, MRK, PFE, PG, TRV, UTX, VZ, WMT, and XOM. Some of these 22 stocks are in strong uptrends; others of this group look like they are consolidating ahead of potential further gains. Not all of these stocks are 'equal' in their bullish potential but all look capable of making further gains.
Pivotal overhead resistance based on a line of prior highs is still apparent at 12200, extending to 12280. Next resistance starts in the 12400 area, with fairly tough resistance beginning around 12600, extending to the 12750 area.
Below 11800 support and where the chart would turn bearish, next support begins in the 11600 area.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) chart remains bullish, especially given that the Index rebounded from its 21-day moving average and has stayed above its previously penetrated (to the upside) down trendline. What remains is for COMP to climb above its 200-day moving average which has been acting as a kind of resistance; a visual indication of the struggle COMP is having in regaining the bullish momentum the Index had prior to its sharp late-July/early-August decline.
Near resistance is at 2670, at the 200-day average, then at 2750, the prior high for the move that began from the strong rally that started from the early-October bottom.
Near support is again the same as I indicated last week in the 2600 area; next support is at 2550.
COMP looks capable of a move up into 2750-2800 resistance in that the recent consolidation could be about half way in a move higher based on the pattern that's unfolded so far. This bullish view assumes that COMP continues to hold support in the 2600 area.
As I said in relation to the S&P 500 chart, the fact that my bullish 'sentiment' indicator (seen above) hasn't risen much yet, even with what looks to me like positive chart, is a bullish plus from a 'contrarian' point of view. Generally, it takes a clear cut break out, for example above prior highs, to get traders bullish. Most traders are 'momentum' players who FOLLOW a trend rather than ANTICIPATE the trend ahead. Of course, after the past weeks' volatility, you can understand this dynamic. Still, this pattern tends also to be true in less volatile times; human nature involving markets (cycles of fear and greed) hasn't changed much since Charles Dow's day.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) chart is marginally bullish in that our most recent weekly close saw NDX at a price holding just above its down trendline. NDX found support in the area of its 21 and 200-day moving averages, which are the pivotal bullish chart and indicator developments.
A primary technical consideration is the fact that the recent consolidation has been at the high end of the overall advance from the recent low occurring at 6 percent under NDX's 21-day moving average. A sharp index rally to above the 21-day average, then a pause, with the pause/consolidation not giving much ground, makes for a bullish chart; this pattern suggests that the recent pause might even be only half way in its advance. An extension of the prior rally could be less than one tacking another 150-200 points but I rate the odds of further gains to be good from a technical perspective. A bullish outlook of course assumes a breakout to come above recent congestion.
Bullish potential aside, NDX still has to pierce near resistance at 2340 to actualize a next leg up. Next resistance comes in around 2400-2412, extending to the prior July intraday high at 2438; prior Closing highs from this period were at 2429.
If NDX slips back under its 200 AND 21-day moving averages, further weakness is suggested. My highlighted support points this week are at 2280, with next lower support around 2240.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) chart has rebounded to, but not yet above, the QQQ down trendline. On the bullish side of its pattern is that like the underlying NDX, support of course was found at the 200 and 21-day moving averages. I'd like to see a decisive upside penetration of the aforementioned down trendline before putting on my bull hat (horns?).
Overhead resistance is seen first at the most recent high at 57.6; next, and highlighted below on my daily chart, is 58-58.3 resistance with further overhead resistance in the 59-59.2 area.
Near support is seen in the 56 area, with next support at 55.
Daily trade volume has recently picked up a bit as prices held at and around 56 support, suggesting some fresh buying coming in; not a lot and nothing like the volume that comes in on sell offs, but there's minor bullish encouragement with this facet.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) held at and just over 720 or at its 21-day moving average, which was bullish. As with all the other major index charts, RUT hasn't given back much of the gains achieved in the rally off its recent lows which is the primary bullish aspect I'm drawn to on the chart. The rebound from the 21-day moving average is a bullish plus. My 'best case' outlook is RUT heads to 800 or a bit higher next. First up to be overcome however is near resistance at 752, extending to the 769 area.
Expected support is at 720-711, then at 700. If RUT doesn't hold above its previously broken down trendline the chart is not going to look especially bullish by the Index holding 700 support.
If RUT doesn't continue higher relatively soon, bullish potential implied by RUT's recent tight consolidation starts to fade some. The index looks poised for some further gains. I almost hesitate to predict further upside, for fear of another bearish wave perversely rolling in from European news. I'll go with the charts as I always have.
GOOD TRADING SUCCESS!