THE BOTTOM LINE:
Pullbacks in the Market continue to be short-lived; on a technical/chart basis showing continued buoyancy in prices due to strong underlying buying in equities. Nevertheless, bullish sentiment among traders doesn't get high for long which keeps market advances like the one we're in going longer ironically.
Tech stocks in the form of the broad Nasdaq Composite (COMP) Index has had a bullish upside breakout as COMP pierced a line of a number of prior highs. I've been bullish on this advance and continue so, especially if tech stocks start to get a play here. A decisive move above 2865-2878 in the Nasdaq 100 (NDX) would be a technical breakout above prior important highs and suggest continued tech strength.
The overall Market continues mostly driven by the strength in 2/3rds of the Dow 30 and in other monster cap companies in the S&P Index. I rate this week 20 of the 30 Dow stocks as bullish or strongly bullish. Last week I rated 18 in that category.
More money flowing into the tech sector(s), as we may be seeing the start of, would suggest that the appetite for risk was growing in the Market and could broaden out stocks participating in the current advance; more stocks would participate.
Where is money going to go if not into equities. 1.5% in a 10-year government note interest you? Gold has lost much luster and value of late. Real Estate, here and there may offer something. Almost by default, equities are increasingly seen currently as the best chance to grow 401k's and financial wealth.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) chart is bullish. The strong rebound set up from the dip to technical support at the low end of SPX's uptrend channel. Strong buying interest in stocks (buy the dips) caused not only a good-sized recovery move but a move to a new all-time weekly Closing high, exceeding the 2000 and 2007 peaks. That, ladies and gentlemen is a very big deal.
I've highlighted first chart support in the 1570 area, with next lower, and pivotal, support at SPX's up trendline in the 1550 area.
Immediate overhead resistance is at 1600. I say that more of the knowledge that those even-100 price markers will be where aggressive sellers will want to come in, at least initially. As implied by my upper channel line, resistance looks to be in the 1620 area near term.
Technical measures like the Relative Strength Index (RSI) seen above shows SPX hovering just under a 'typical' overbought zone (70-75) which tends to suggest above-normal risk of a downside correction; more so certainly than expectation of another spurt higher. Given price/chart considerations I tend to discount chances of a major correction.
I'm impressed by the staying power of rallies where bullish 'sentiment' readings DON'T hit repeated highs in the overbought zone I've defined, also as seen above. This has been the case in our current Market cycle.
S&P 100 (OEX) INDEX; DAILY CHART
A big difference between the bullish S&P 100 (OEX) Index chart and big brother SPX is that OEX hasn't yet cleared prior all-time highs unlike the broader S&P 500. OEX is close only to challenging its 2007 high weekly close. Going back to the 2000 bubble peak, the high OEX Weekly close was 830 (729.8).
708 is noted as first support, extending to 700 at the intersection of OEX's up trendline.
Key resistance at 725-727 is implied by the top end (725) of OEX's uptrend channel and by the prior high Weekly Close (727.8) at the last multiyear peak (2007).
From a trading perspective, the next key technical benchmark so to speak is the 2007 weekly 727 high. The big cap S&P 100 could clear this in the next 1-2 weeks based on its present price trend. Friday of the next two weeks tells the story on this!
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU) has a bullish chart and this is of course built on the Average of the 30 stocks comprising the Dow 30 (INDU). Last week I evaluated 18 of the 30 as in the bullish to very bullish category. For the week coming up I now have 20 or 2/3rds of the Average as having bullish to very bullish charts. The 20: BA, CVX, DIS, GE, HD, IBM, JNJ, JPM, KFT, KO, MCD, MMM, MRK, PFE, PG, T, TRV, UTX, VZ, WMT.
I have had a long-term target for the Dow to the 15000 area and this is now a price not all that far away. The trend channels project or visually show the average highs and lows on a certain trajectory or steepness of ascent (or descent). Based on my highlighted uptrend channel, I don't see chart resistance until above 15000, in the 15100 area based on the projected upper trendline.
Key near INDU support comes at the line of prior highs at 14680. Next lower technical support is highlighted at 14550, the current intersection of INDU's up trendline.
Last week I wrote that "I'm maintaining my bullish intermediate to longer-term bullishness in the Dow with an expectation that we could see 15000." That thought is still the same, more so even based on the strong rally of this past week. Short-term trading wise a break of 14700-14680 is bearish; then look to the trendline for next support.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) chart has shown a bullish breakout in terms of 1.) its decisive upside penetration of a long-standing line of resistance at 3270 and 2.) support subsequently developing in this area on Friday weakness. Key support is 3250-3270 in COMP. 3200 is major technical support.
Near resistance is at 3300-3303, with next resistance at 3355 or the top end of COMP's uptrend channel.
COMP could be again be headed to the top end of what has been its uptrend channel at 3355; this area becomes both a projected target and also a likely resistance where strong advances might start to slow down.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) chart is bullish. NDX had been in what in technical terms would be congestion or also termed a sideways consolidation within a larger bullish trend. NDX's strong move above prior resistance in the 2800-2820 area, with subsequent highs hitting September highs suggest NDX will follow the Composite higher over this month.
I've noted resistance at 2865, which I could be more accurately labeled the 2865-2878 zone; resistance implied by the upper end of NDX's uptrend channel intersects at 2920 currently.
Near support is at 2800, extending to 2757, important support implied by NDX's up trendline.
I envision NDX going to new 12-month highs. My most bullish 3-month projection is a 3300 target but more realistic is to the 3000 area.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 (QQQ) tracking stock is bullish like the underlying Index of course. Only the price levels being different. Near resistance is 70-70.1; next projected chart resistance comes significantly higher, at 71.5.
Near QQQ support is at 69. Key trendline support is at 67.5.
It looks like QQQ is in the midst of another move higher and a move can be projected to 71.5-72 at some point.
Daily trading volume shot up on the last rally, suggesting that investors might see tech stocks as one of the few big opportunity areas in a key sector that's lagged the rest of the market.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) Index
remains within its uptrend channel; the recent dip below 918-920 support was well bid, well supported. 900 remains a key longer range support; broken, the intermediate trend turns lower.
Currently, RUT has resistance around 953. Repeated highs in this area suggest that and forms what Dow called a line (resistance) formation. A robust move above 953-954 would suggest another up leg was underway; as always with the condition that such any apparent technical 'breakout' be sustained the following trading day.
IF so, a potential objective is to as high as the top end of RUT's uptrend channel, currently at 990. It would take a strong move in the Nasdaq to spark a big further RUT upswing and there is strength showing in tech lately.
GOOD TRADING SUCCESS!