THE BOTTOM LINE:
There's this old trader saying about the market when it climbs a "wall of worry". Prices fell into midweek in a panic of worry, followed by the relief when it seemed the worst won't happen!
Carrying on with my 'lead' chart of recent weeks, use of this first chart highlights areas where there was high potential for short-term trend changes. So regularly were short windows of high and low extremes of the hourly Relative Strength Index (RSI) indicator before the trend shifted. This chart type and indicator has been the ticket for some time now. It works great in wide-swinging trading range markets.
Adding another week to the hourly OEX chart, the redrawn (lower) up trendline shifts to a less steep up angle. Like the economy the market is still going up, just at a slower pace. From a trend perspective little has changed. The bullish pattern of higher highs and higher downswing lows continues. Our most recent cluster of lows was above the prior, adding short-covering 'fuel' to the strong rally that followed to a new short-term high.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) recent high pierced a line of prior highs handily and the Index SPX has shown a continued advance within the highlighted bullish uptrend channel. The presumed upper end of SPX's broad uptrend channel suggests possible resistance just over 1400. Resistance also suggested by prior intraday highs in late-March/late-April at 1415-1422.
Near support is seen at 1360, with trendline support at 1336 currently. Major support is suggested at 1320, extending to 1300.
Trader sentiment readings continue to trend sideways without registering bullish or bearish 'extremes'. This type pattern also goes with the climbing a wall of worry theme. Stocks go up on short-covering when the world doesn't come to an end; as in Europe, as with China, etc.
Best trading advice is to go for shorter-term objectives at extremes in the RSI such as seen above with the hourly OEX extremes OR wait out this period. Play the upside on a pullback to the up trendline around 1340. I could see a possibly touch to 1400 but a short-term retreat looks 'due'.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart remained bullish as the last panic sell off stopped a bit above the prior (down) swing low. Given changing perceptions, the dominate uptrend reasserted itself with a sharp 2-day advance that handily pierced prior rally highs.
Yet to come, and I can't see these highs being attacked just ahead, is the ability for OEX to pierce prior Closing highs at 638 and 645. More likely that we come off this recent Friday-short-covering spurt and prices fall off some in the coming week.
I've highlighted expected first technical support at 625, then at the trendline at 615. If you skipped over my first chart seen above, that of the hourly OEX, black up to the top most chart.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
I've known the Dow 30 (INDU) Average so often acts very 'technically'; it did so this past week as INDU rebounded strongly from its low for the week after touching its 200-day moving average.
We can measure support as suggested by INDU's line of prior highs at 12950 with next lower support at 12800. Still-lower trendline support is suggested at 12660 currently.
I've noted potential resistance at 13130, with the most pivotal resistance suggested by prior several weeks' worth of highs made in the 13280-13300 area.
Short-term look for the Dow to fall back from recent highs and consolidate gains. A bullish chart is well maintained if there is a pullback to around 12950, with subsequent lows mostly above it.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) is technically and chart-wise at a 'crossroads'. COMP's broader trend is starting to drift sideways and this could go on over the low-volume summer.
The bullish side was seen with COMP's strong rally from a low above the Index's prior sell off low. Good bullish omen in an UP trend. The technical definition of an uptrend is higher highs and higher (downswing) lows.
A bearish pattern is suggested if the highlighted DOWN trendline is a stopper. YET to come also is a move above prior RECENT highs at 2976-2988 to would 'confirm' the intermediate uptrend.
Support is seen at 2900, with next lower support suggested at the up trendline intersecting at 2860.
Key near resistance is at the intersection of COMP's up trendline at 2960; next resistance would then be at a key round number for the Composite, 3000, with resistance extending to 3050. With Apple getting taken down a peg it looks to hold down COMP and contribute to a further sideways drift.
Trader sentiment readings seen above have been running at a relatively 'neutral' level that keeps the CPRATIO line from pushing above 1.6. This pattern of low bullish expectations in the face of a mostly rising market is part of the low-enthusiasm climbing a 'wall of worry' market because there are limited choices beside stocks to make returns above 3-5% currently especially with real estate so in the doldrums.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) Index is bullish in its pattern. An uptrend was 'confirmed' on the last decline as lows formed mostly above the 2550 area as suggested by the up trendline seen below. I've highlighted first support at 2600.
As with all the major index charts, NDX's sell off low was a notch above the previous low. A type of 'indecision' pattern is seen with such rapid back and forth price swings. The uptrend remains dominant as far where NDX bottomed this past week. In terms of potential for a new high for this move, it's iffy near-term, more likely further on.
Key to a new up leg is the ability for the Nas 100 to pierce its line of prior highs at 2660. A sustained rally or up leg above 2660 're-confirms' the current uptrend. Next resistance then comes in around 2690-2700.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) remains in its bullish uptrend channel mirroring the NDX chart. Last week I saw little chance of a strong up leg in the next 1-2 weeks. WRONG! as an equally strong rally followed a sharp selloff. These back and forth price swings and the quickness of them is not surprising both being summer and with so much computerized trading.
Near resistance and a key one comes in around 65.2, with resistance extending to 66 up to 66.5 at the upper end of the presumed broad uptrend channel.
Near support is seen at 64, with next support just under 63. Look for good support on pullbacks but continued tepid bullish conviction by the big market players and movers.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) barely remains within a broad uptrend channel. I noted last week that "RUT looks vulnerable for a pullback to 775, to perhaps 765-760. The low for the past week was 765. Sometimes you nail highs and forecasted lows in the market and sometimes the Market NAILS you!
Look for RUT support in the 780 area, extending to 770. Resistance comes in first at 800, then at 810 and 820, exactly as noted last week.
I anticipate some further gains but modest ones, such as to the 810 area. Only if technical at 775-770 gives way, 750 becomes is a possible lower target.
GOOD TRADING SUCCESS!