THE BOTTOM LINE:
Dow Theory 'confirmation' of a renewed major bull market was on the mark ahead of strong upside of past week. So also was technical 'signal' of the move from the low end of the uptrend channels of the major indexes. Nasdaq is lagging recently but I anticipate catch up later. Apple (AAPL) is lagging but weekly chart shows a bullish downward sloping wedge, a pattern if predictive like I anticipate suggests tech prospects may be better than currently anticipated. Right now it's a Dow and S&P show.
Much higher levels can be projected longer term as a theoretical upside although 1700 in the S&P 500 and 16000 in the Dow isn't something I'd bank on but wouldn't be surprised to see in the months ahead.
The market is getting toward overbought levels but in strong bull trends this isn't a reliable 'timing' tool as to this situation being a 'sell signal'. Quite reliably or quite often bull markets get to extremes on the upside by traditional technical indicators like RSI, MACD, Stochastics and then stay in this condition for weeks at a time. Sideways moves tend to be more the way the market corrects or 'throws off' high readings in the overbought ranges. On an 13-week basis the Dow is the most 'overbought'.
Bullish trader sentiment is still somewhat moderate, although rising, but isn't yet excessively bullish. The pundants anticipating 'public investors' may get burned jumping in at current levels are probably as wrong as ever since they base opinions on stocks already having had a strong move off their lows. Too bad they can't 'read' charts going forward. Just saying!
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) should test 2007 highs in the 1550-1555 area and could hit 1570 resistance implied by the top end of SPX's uptrend channel.
Very near support is at 1540, next at 1520, extending to what is probably pretty solid support in the 1500 area.
Those traders who 'believed' in the bullish implication of the Index holding the low end of its broad multimonth uptrend channel were rewarded. That was an 'easy' call in a way relative to predicting just where this rally will pause or pullback. So far it looks good for the bulls still.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart is bullish in its pattern but resistance implied by the top end of its uptrend channel is close by. The close-only and OHLC bar chart are suggesting resistance comes in around 702-704. Don't hang in too long in calls and bullish strategies if you're a short-term trader type (like me, actually).
Buying interest/support looks like it could come in on dips under 690. Next lower support is at 680, extending to the 677, then down toward 670 on a closing basis.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU) continues to lead the way in this bull market and in this renewed up leg but resistance around 14600 may come into play next.
Strong support is suggested in the 14100-14000 area, extending down to 13800.
I noted in my initial bottom line comments that the Dow was most overbought if measured on 13-week basis, but isn't quite at a major(overbought) extreme near-term; not yet on a 13-day time frame. Still, it's a moderate to high-risk situation if jumping in now to Dow Index calls in terms of 1-2 day corrections.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) is bullish in its pattern and could reach the 3300 area next.
Near support is at 3200, extending to the 3140 area or the low end of COMP's uptrend channel. Major support begins in the 3100 area.
COMP is the least 'overbought' of the major indexes on a daily and weekly chart basis.
Trader sentiment has been rising but isn't yet at the kind of extremes that I associate with a HIGH risk of a significant pullback.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) is in a bullish pattern as well as the Composite. If I'm right on a possible longer-term declining 'wedge' pattern on a weekly chart basis for Apple (AAPL), a turnaround in the house of Jobs should coincide with a eventual strong catch up move in the big cap NDX.
The Nas 100 has a big milestone at its prior closing highs in the 2860 area, which also coincides with resistance implied by the top end it broad uptrend channel. I anticipate the prior highs will be tested. I don't look for any big pullback before NDX gets back up over 2850 again.
Technical support is seen in the 2760 area, extending to 2730, with fairly major support coming in around 2700.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) reflects the bullish NDX chart of course; only the levels are different in terms of possible chart resistance (around 70.5) or support levels, which are highlighted at 67.6, extending to 66.8.
Volume levels have been low on the most recent rally, which tempts one to say that possible QQQ investors (in the stock) are completely off base or that RISING On Balance Volume or OBV is the only volume measure worth following; probably the later.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) Index is bullish and back on track so to speak as RUT went to new highs finally and looks headed to the upper end of its uptrend channel again, suggesting next serious resistance coming in around 963 or a bit higher over time.
Support is seen at 920, extending to the 910 area on down to 900 a bit under. Major support comes in around 880.
GOOD TRADING SUCCESS!