THE BOTTOM LINE:
Just when the charts looked maximum bullish, at least with the S&P, it was time for a bear raid. Liquidating sell stops were elected and run but intraday lows on Friday reversed and rebounded from support implied by up trendlines in the case of the S&P and Dow.
The Dow 30 (INDU) continues to have the best relative strength of the major indexes. INDU didn't fall even as far as its 14400 support and had a solid intraday upside reversal on Friday. 18 of 30 Dow stocks remain in quite strong uptrends.
The Nas Composite (COMP) and big cap Nas 100 (NDX) pulled my prior definition of their up trendlines lower when connecting the mid-November intraday low to Friday's. Stay tuned as to whether these revised up trendlines 'define' future support.
The uptrend is intact but it's also time for the bulls to 'prove' themselves and generate some follow through buying. A couple of S&P 500 (SPX) Closes below 1540 cracks the current upside momentum but no intermediate reversal is seen unless the S&P pierces 1485 on a Closing basis.
The Nasdaq Composite has buying interest from 3170 down to the low-3100 area. COMP would reverse lower if the Index couldn't hold 3100. Key trendline support in the big cap Nas 100 Index (NDX) is at 2750. NDX reverses lower in its intermediate-term trend below 2700.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) chart was "bullish, bullish, bullish" in its chart pattern according to my last week comments. WRONG! I was seeing a continued move higher per the apparent chart breakout but instead of a next run to the 1600 area, SPX faltered at 1570 and fell, not rose, another 30 points.
The bullish chart pattern is nevertheless alive to date given the rebound from trendline support per my SPX chart below. Key near support is at 1540 currently, at the intersection of SPX's multimonth up trendline; next support is at 1520. Fairly major support should lie in the 1490-1495 area per the prior low; a couple of closes below this zone would turn the intermediate trend lower.
Immediate overhead resistance is in the 1560 area, with pivotal resistance highlighted at the line of prior recent highs at 1570. Major resistance begins in the low-1600 area at the upper end of SPX's uptrend channel.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) Index remains bullish in its pattern notwithstanding the recent dip. A key development chart wise was the fact of support/buying interest developing at the up trendline; enough to lead to an upside reversal from the intraday lows on Friday (4/5).
Key near support is at 695 at the up trendline, extending to 690 and the 50-day moving average. I've noted resistance in the 707 area, with next resistance assumed for the top end of OEX's uptrend channel.
The week began with a strong early start into highs seen Tuesday-Wednesday. Once that rally ran out of steam and 700 was penetrated on a nervous Friday, stops were run causing a minor selling flurry until buying came in below 700, with selling drying up when OEX fell to its up trendline.
The dip to OEX's up trendline seen above could again indicate technical support as it has previously (those were buying opportunities). I'd prefer to buy at apparent trendline support that's also accompanied by the Relative Strength Index (RSI) closer to an oversold low; OEX is some distance from that with the RSI indicator only at a midpoint in its range.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU) has a bullish chart and maintained decent buying interest on the dip below 14550 support. Intraday lows held support in the area of its up trendline; rebounding in fact before INDU fell all the way to its up trendline.
If you look at the 30 Dow stocks, you can see how (mostly) very strong uptrends continue in 18 of the 30 INDU stocks; namely:
BA, CVX, DIS, GE, HD, IBM, JNJ, JPM, KFT, MCD, MMM, PFE, PG, T, TRV, UTX, VZ and WMT. Dow bellwethers GE and IBM are important to see remaining in their weekly advancing trends.
Key near INDU resistance comes at 14670. I'm maintaining my bullish intermediate to longer-term bullishness in the Dow with an expectation that we could see 15000. I don't think INDU has come within 300+ points of 15000 to not hit the 15000 milestone.
Bearish would be a decisive downside penetration of near support in the 14400 area. I wrote last week that "My bullish fever is dampened if the Dow starts slipping below 14400..." Fairly major support comes in at 14000, extending to 13800. The intermediate trend would reverse lower on a weekly close below 13800.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) fell out of its near term bullish pattern but held support implied by the trendline connecting the mid-November low with the Friday (4/5) low per my re-drawn lower support trendline; a line connecting two lows or highs have potential to develop as an up or downtrend. If COMP is to remain within my re-drawn uptrend channel, look for 3170 to hold up as near support. Next support suggested by the prior cluster of lows is in the low-3100 area. A close below 3100 would derail the intermediate uptrend.
I wrote last week that "... a couple of closes below 3200 would be a bearish dip below technical support and point to slowing upside momentum." You can see that COMP came back to close above 3200 and its 50-day moving average. Stay tuned for any more 'fear and loathing' of stocks that comes out in the coming week!
Near resistance is at 3220, extending to 3250. Next key resistance per my red down arrow is at the line of prior recent highs in the 3270 area. Resistance implied by the high end of COMP's broad uptrend channel comes in around 3350.
Continued closes above 3200 maintains a bullish chart; closes below 3100 turns the COMP trend down intermediate-term. Absent such a dip, I remain mildly, not wildly, bullish on the Nasdaq.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) has faltered in its bullish chart pattern with the break below 2800. This was tempered by the strong Friday rebound from the 2750 area just under support implied by the prior upside (price) gap, with this price action keeping the overall uptrend on track.
As technically-oriented traders see it, a trend is up until/unless the prior downswing low is penetrated and NDX has held significantly above this important 2700 support so far. I've re-drawn NDX's up trend using just the 'minimum' of two lows; i.e., Mid-November and the Friday (4/5) low. This 'tentative' or initial trendline suggests near support at 2750, extending to 2700. A Close below 2700, especially for more than a single day, would be bearish.
Immediate overhead resistance is apparent starting at 2800, extending to 2820 recent intraday highs. Next resistance, implied by various prior highs from September comes in at 2864-2878.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 (QQQ) tracking stock fell sharply below 68 support and created a bearish near-term break in upside momentum. It looked like QQQ could break out above 69 but never did so in any convincing and sustained fashion; instead, 68 support got pierced.
67.0 represents potential technical support implied both by QQQ's recent low and my re-drawn up trendline, using the November intraday low as a 'minimum' second low to construct this trendline. Next lower support looks to come in around 66.5.
Near resistance is seen in the 69 area. Resistance implied by the September highs begins in the 70 area and extends to 70.5-70.6.
A sizable spike in daily trading volume was seen on Friday's wild ride as some panic selling below 68 ensued. Almost as a matter of course, once sell stops were hit and that selling had run its course it didn't take much buying in tech stocks to lift the NDX tracking stock by the Friday Close.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) Index had been bullish in its pattern but a line of highs that formed in the 953 area was a stopper over the prior two weeks heading into this past one. I was assuming that the sideways trend was probably a bullish consolidation but once RUT started slipping below 940 and the 21-day moving average, selling took over into mid-week.
Immediate overhead resistance is 940, at what was 'support'. Pivotal next resistance remains at 953. Fairly major resistance is likely to be found at the high end of RUT's uptrend channel, currently intersecting just over 980.
I think RUT may still be headed for 1000 at some point but near-term it's more of a challenge for the bulls to support the Russell in the key 910-900 support area. A Close below 900, not reversed the following day, would be bearish and suggest at least a temporary or interim top.
It should also be noted that RUT is approaching an oversold 13-day RSI reading, which has been a previously bullish omen, suggesting good upside potential relative to downside risk.
GOOD TRADING SUCCESS!