THE BOTTOM LINE:
The Nasdaq, which is struggling to gain traction, is lagging the S&P which has hit some prior resistance. All the major indexes remain within their broad uptrend price channels as you'll see on my charts of the various indices.
With the S&P indices and the Dow, support has been found at the key 21-day moving average. Not so in the Nasdaq which has seen the Composite (COMP) and Nas 100 (NDX) slipping under their 21-day averages. A mixed technical picture in terms of prospects for further upside momentum is seen with the two markets.
The S&P has two major bellwether stocks, IBM and GE, in strong uptrends that have cleared their 2012 highs. I'm watching what these two big cap S&P bellwethers do in terms of their price action forecasting (or not) further upside progress in the S&P indexes. IBM should hold above 210 to keep on its current bullish track and GE above 21.5-22.
In the Nasdaq, Nasdaq bellwether Apple Computer (AAPL), has pulled back to the low end of its daily chart uptrend price channel and could break under that up trendline at 650, suggesting further Nasdaq weakness.
I'm watching the S&P 500 (SPX) and the Dow 30 (INDU) closely for signs of an interim top if SPX can't pierce the 1470-1472 area on a Closing basis. With the S&P 100 (OEX), a line of prior resistance comes in at 675 and in INDU, key near resistance is at 13620-13650.
This rally is looking a little tired but I also thought that last week and, while the Nasdaq had a weak rally, there was no breakdown into a full-blown correction. The current advance will end when it ends and any opportunity for a downside play may be hard to forecast on a week to week basis. If Nasdaq continues to lose upside momentum and the S&P and Dow can't clear the aforementioned resistance levels, I anticipate a drift lower.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
Contrary to any expectations I held last week for a possible breakdown below 1440, the S&P 500 (SPX) instead rallied on Monday-Wednesday from support implied by the 21-day moving average and extended those gains into the end of the week.
Friday saw a retreat from an intraday high in the 1472 area, which was a prior resistance point. I've noted 1472 as initial resistance, with resistance then extending to 1500-1505.
Current support at the 21-day moving average comes in around 1450. Key near chart support is in the 1435-1425 price zone, with fairly major technical support beginning in the 1400 area.
A decisive upside penetration of 1470-1475 could lead to a test of resistance around 1500, at the top end of SPX's uptrend channel; I'd look to take at least some profits on calls or other bullish strategies in this area if reached.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) remains within its bullish uptrend channel still but has backed off from resistance implied by a line of prior highs around 675. If OEX can achieve a decisive upside penetration of 675, next resistance is suggested by the current intersection of the upper trend channel boundary at 690-692.
As with the S&P 500, OEX was finding support on dips to the area of its 21-day moving average. Initial technical support implied by this key trading average is at 667.
Key trendline support is down in the 662 area currently. Major support begins around 650, extending to the low-640 area.
The pattern in OEX looks like there could be another decline ahead and one that could carry further than the last sell off from 676 to 660. What happens next looks bound by whether OEX can penetrate 675 resistance or begins another downswing. I continue to track the Index's progress within its well-defined uptrend channel. Currently I don't anticipate a move above 690 or, over time, to above 700; conversely, the 660 area looks like it can hold up as support.
As noted in my initial 'bottom line' comments above, watch what big cap S&P bellwethers IBM and GE do as far as forecasting further upside progress in OEX. IBM should hold above 210 to keep on its current bullish track and GE above 21.5-22.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU) looked last week like it might start falling under its 21-day moving average, often a 'signal' for a further decline. Instead, as you can see on the chart, support was found consistently at this key trading average. Next up is what happens at a line of resistance that comes in around 13690-13700.
A decisive upside penetration of 13700 would suggest a possible further up leg that could end up carrying to the top end of INDU's broad uptrend channel. Potential resistance looks like 13875-13908, extending over time to 14000. The 14000 area was the key deflection point (resistance) at the top end of the 2003 to October 2007 rally.
Initial Dow support at its 21-day moving average is at 13488 currently, with next support at 13400; next support then extends to INDU's up trendline which intersects at 13350 as highlighted on my daily Dow chart. I've also highlighted anticipated support at 13200, but major support is still 13000.
I noted last week that while the Dow might start falling below 13400 support "There are however 11 of the 30 Dow stocks still in strong uptrends, so I don't rule out an upside surprise either."
I'm expanding my bullish chart list for the Dow 30. This list includes CVX, DIS, GE, very definitely HD, IBM, JNJ, probably KFT, probably KO (after its 2:1 split), MCD, MRK, PFE, PG, T, TRV, VZ, WMT and XOM. All of these 17 are capable of further gains, some more than others. On a bottoms up bullish potential basis, the Dow looks capable of challenging 14000 ahead. Conversely, a number of the aforementioned 17 Dow are extended in the sense of being 'overbought'.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) remains within its broad uptrend channel and is technically bullish in this regard. However, the Nasdaq is lagging the S&P and by week's end had again fallen under near support implied by its 21-day moving average. A mixed technical picture that suggests that Nasdaq not only might decline further but dampen the current strong S&P uptrend.
Key resistance comes in at 3190-3200. Only a move above this area would suggest potential for a next up leg to the top end of COMP's broad uptrend channel line currently intersecting in the 3256 area.
Key near support is at 3100, extending to COMP's up trendline at 3050.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) Index has the same mixed pattern as the broad Nas Composite. NDX looks like it might start falling toward the low end of its uptrend channel. Support suggested by NDX's up trendline is at 2758 currently. Fairly major support begins at 2700.
Last week I highlighted what looked like a bear flag pattern that was traced out by the Index. This didn't exactly pan out although there was only weak bullish action that followed and only a day here or there with NDX above support implied by the 21-day average.
The pattern traced out by NDX looks like a possible down-up-down formation; i.e., a first leg down, a weak recovery rally and the expectation of another downswing. Stay tuned on how this pans out.
Weakness in NDX bellwether Apple Computer (AAPL) is acting as a drag on the Nasdaq indices. If AAPL rallies from the 650 area, NDX should enjoy a bounce too. If AAPL starts falling below 650, the stock could wind up at 600 and drag NDX lower as well.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nas 100 tracking stock reflects the mixed NDX chart of course. I wrote last week that QQQ could fall to the 67 area. 68 now looks more like a key initial chart support. Support below 68 comes in at 67.4. Major support begins in the 65 area.
Near resistance remains the same, at 70, extending to 70.5. major resistance is anticipated in the 72 area, at the top end of QQQ's broad uptrend price channel.
Low volume continues to be the case during rally phases and On Balance Volume (OBV) is also showing a mostly mixed picture; not surprisingly the same picture presented by price action. If I had to bet on next direction for the Q's I'd have to 'bet' lower. Since I don't gamble (throw the dice) as much as take calculated risks based on risk-to-reward calculations, I'm on the sidelines. I'd consider buying QQQ if the stock got back to the 66 area, which would be a measured move objective.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) tracked gradually higher this past week but has also encountered apparent resistance at the 21-day moving average. You can see this clearly on the RUT candle chart. Friday's spike higher didn't garner any follow through and the 'body' of the candle (distance between the Open and Close) finished under this key average.
The Russell looks like there's another downswing ahead if RUT traces out a 'typical' down-up-down corrective pattern. We've seen the first decline, then a rebound, with a next move looking like it could be another downswing.
Near resistance is at 860, extending to 868-870. Major resistance begins in the 890 area, extending to 900.
Near support is seen at 832, extending to the 820 area. Major support is 805-800.
GOOD TRADING SUCCESS!