THE BOTTOM LINE:
A strong move to new highs is clear and the S&P approaches its September peak. The Dow Transports gets near to 'confirming' the Industrials in its primary up trend.
I don't usually talk about Dow Theory and the interaction between the Dow Industrials (INDU) and the Dow Transports (TRAN) for the simple reason that there hasn't been much to talk about since TRAN has been lagging for so long and NOT making new highs (unlike INDU) since July 2011. However, the recent surge in the Transports puts this 'other' key Dow Average within striking distance of also making a new high Close. See my first chart.
Such a move with TRAN would be a strong confirmation of the Bull Market that the US market has been in since 2009.
The Russell 2000 (RUT) was this time the 'leading' index in terms of being in a very strong move, with little reaction to the lack of action (for a time) by Congress and the FIRST to break out to a new high for the current move. RUT looks to be pointing the way to a strong January and strong first quarter for stocks.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
In a December 13th Trader's Corner article I made a point that a so-called measured move objective, which is a way of calculating what a 'minimum move' for a next up leg would measure out to. I projected what this kind of move would look like for both the S&P 500 (SPX) and the Nasdaq Composite and both of these (now outdated) charts are seen in my commentaries. My SPX chart from 12/13/12 is seen first, prior to the current S&P chart. As of the Friday Close, SPX's 'measured move' objective is near to being met.
The current chart of SPX is seen next. The Index has been in a strong uptrend since its November lows. I've highlighted its bullish uptrend channel and support and resistance projections.
Near SPX resistance is at 1468-1475 and the Index looks headed to the 1500 area as a possible next price target and this is where I note a next resistance assuming there is a decisive upside penetration of the line of prior highs.
1450 is key near support, with next support at 1420. The technical tip off so to speak for bullish chart action was the strong rally from support implied by the previously penetrated down trendline. Prior resistance had 'become' subsequent support.
We can't ignore that SPX is nearing an overbought RSI extreme as seen above, so risk of a shake out grows. Trader sentiment is fast becoming quite bullish also. Still, I look for a continued move higher over time.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 chart is bullish but be watchful on the approach to new highs of course. 670 looks like immediate resistance, then at 673-677. A Close above 677-680 suggests that 700 is a reasonable intermediate objective.
Near support is at 660, with stronger support seen in the 650-645 area.
OEX is nearing an overbought reading on the RSI so some selling pressures can come in on a continued move higher but it buying pullbacks will also probably pay off.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
I wrote last week that this time a lot of the Dow 30 stocks looked like they could rally some and it wouldn't take a lot to pull INDU higher. The Average has 'room' so to speak to move still higher within its uptrend channel.
Resistance implied by the upper end of this bullish channel AND by the cluster of prior highs suggests specific first key resistance in the 13600 area, extending to the 13650.
Support is seen currently at 13300, then at 13200.
Over time I could see the Dow reaching 14000, a quite doable objective given what I see with the 30 individual Dow stocks.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
I had also computed a measured move objective for the Nasdaq Composite (COMP) back on December 13 in my aforementioned Trader's Corner article which is seen before. Note the DATE and that chart was current as of mid-December. The up to date COMP chart will follow.
The point I make here is that COMP is now within striking distance of having a second up leg that is at least equal to the first run up or first 'leg'. I'm anticipating a move that may go beyond the so-called measured move projection seen below, and that I calculated a while ago, but stay tuned on that!
The Nas Composite chart is bullish and COMP looks like it could be headed to 3150, then to the 3200 area over time and in a challenge to the prior highs.
3080 is near support, extending to 3050. A move below 3000 at this point would be bearish.
Bullish trader sentiment growing and is something to keep an eye on; the longer that the market advances without an EXTREME of bullishness generally means the longer will be the advance. When we start to see daily CBOE trading volume for all equities calls become twice and more of daily put volume, it suggests a significant risk of a shakeout and selling pressure coming in.
NASDAQ 100 (NDX); DAILY CHART:
The big cap Nas 100 (NDX) index remains within a bullish pattern and bullish uptrend channel.
2780 is resistance implied by the upper end of the aforementioned uptrend channel. I've projected further resistance for the 2850 area, extending to the prior highs around 2870-2878.
Very near support in NDX is at 2715-2700, extending to support implied by a pullback to the prior downtrend channel. 2600 begins fairly major support and if penetrated the chart would look bearish if buying support didn't come in and the Index started closing below 2600, which was the prior downswing low and a key chart point.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) of course reflects the same bullish pattern as the underlying index. Resistance implied by QQQ's uptrend channel comes in at 68 initially. Next resistance is at 69, then 70-70.5 or at the prior highs.
Near support is at 66, extending to 65.
Daily trading volume spiked on the upside move and overnight (upside) price gap which makes for volume 'confirming' price action, which isn't always the case with the Q's.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) Index has been the star performer and was the advance warning to the bears to not get short this market.
Near resistance looks to come in around 885-900; 900 is a key level, but longer-term RUT should be able to work higher based on current strong upside momentum and on a seasonal for the small to mid-cap stocks to advance in the first quarter.
Support is suggested in the 852 area, extending to 840. 820 is must-hold support for RUT if the chart is to remain bullish and with the kind of upside potential that the Index still looks to have.
GOOD TRADING SUCCESS!