THE BOTTOM LINE:
The Nasdaq Composite, Nas 100 (and the Russell 2000) rebounded from lower trendline support 3 weeks back and have now gone to decisive new intraday and Closing highs for the current move in very bullish action. The Dow also rebounded from trendline support at the same time as the tech-heavy Nasdaq and achieved a new Closing high; just not new a new intraday high. Ditto the S&P indices at new Closing highs, just not yet clearing prior intraday peaks.
The S&P indices had a steeply sloping up trendline that got pierced when the other indexes held trendline supports. I for one got cautious on the staying power of the overall Market rebound until SPX and OEX got back into their prior uptrend price channels. Sometimes you have to go with new 'leadership' sectors as soon as their chart patterns suggest a technical turnaround.
I wrote on Wednesday (7/10/13), in my related Trader's Corner piece on "Knowing When a Correction is Over" that the S&P action (in regaining its up trendline) had flashed a renewed buy 'signal'. Caution isn't always a bad thing for a trader but in hindsight I often think I would have done much better without it!
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) is back is its dominant uptrend as seen visually with the price march back up into the highlighted blue parallel trendlines. SPX made a new Closing high for the current advance, confirming the strong bullish aspect of this past Monday's breakout move lifting the S&P back into its Nov-July uptrend channel. Great follow through all week as a rally turned into a gallop.
Further resistance could be had at the prior 1687 intraday high. There's no major resistance to be seen until 1750, the top end of SPX's broad uptrend channel.
Technical support is suggested at 1650, at SPX's up trendline. Fairly major support begins at 1600.
The strong week-long advance puts the Index strongly back up into its uptrend channel, confirming the dominant uptrend as back on track. I said last week that "A decisive upside penetration of 1650 is bullish. 1700 is then a next possible target ..." 1700 was just overhead of Friday's close. The S&P is again nearing what the Relative Strength Index (RSI) would suggest is an 'overbought' market meaning the risk of a shakeout has risen.
Bullish sentiment has risen (as seen on my CPRATIO indicator above) significantly but not yet to what I consider to an 'extreme' bullish outlook. Traders are still more cautious bulls than euphoric bulls. Moreover, high readings don't have a set-in-stone meaning like above 70 time to sell/short. You also have to gauge the strength of upside momentum. When a trend is strong like a current, things get swept further than otherwise and greater extremes are reached in indicators like RSI for a longer period before the index comes back down.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart is bullish. The Index has made a new Closing high. Some resistance is seen in the 757-760 area but based on the strength of this most recent rally that area wouldn't appear to offer major resistance. More major resistance is suggested at the top end of OEX's uptrend channel, currently intersecting at 785 and rising over coming days/weeks.
Solid support should be found on pullbacks to 740; next strong support, in the 720 area.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 Average (INDU), unlike the broader S&P indices, held technical support implied by its differently skewed up trendline. Price action after that was bullish. Next was a strong move above the key moving averages with prices accelerating to the upside after that, to now, when INDU has made a new closing daily and weekly high.
Some resistance could come in at prior intraday highs at 15500-15550 but I would see it as a minor pause if any. Next bigger scale resistance is at 15800 in the Dow, with major resistance suggested at the upper end of INDU's broad uptrend channel, currently at 16000.
Support is seen at 15200. Pivotal chart support is suggested at 14850, at the current intersection of INDU's up trendline.
You have to buy pullbacks, even shallow ones, in this kind of market. We've gone from 6 of 30 Dow stocks week before last in strong uptrends to 17 that had strong gains this past week: BAC, CAT, CSCO, CVX, DD, DIS, HD, JNJ, JPM, MMM, MRK, MSFT, PG, TRV, UTX, WMT, XOM.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) Index chart continues to show a very bullish pattern as has been the case dating from the Index's late-June low at its up trendline, followed by COMP's strong, then stronger, advance. The Composite leaped through prior intraday and closing highs as seen in its upside price gap through and above the prior 3532 high.
3650 seems in sight, at potential resistance suggested by the top end of COMP's broad uptrend channel. Tech stocks are having a surge in prices which is also seen in the strong move in the semi conductors this past week; the SOX Semi-conductor index saw a technical breakout move higher above 475.
COMP support is noted at 3450, with major support at the lower trendline intersecting at 3350 currently.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) is strongly bullish in a strongly accelerating advance. In fact, the kind of steep and steeper advance that puts those daily trading bars on a straight up trajectory. The kind of straight up trajectory that makes me want to exit calls and unwind bullish positions as those 'straight up' moves so often end up in a straight down slide!
I can't project any technical resistance before about 3125 as this level being the top end of NDX's broad uptrend channel.
Good support/buying interest should be found on pullbacks to the low end of the recent upside price gap and a natural support, at 3000; support then extends to 2950.
The 13-day RSI for NDX is in the upper 'overbought' extreme area that puts us on alert of higher risk on new positions betting on still more upside price acceleration.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 (QQQ) went from 'bullish' to hyper-bullish in its pattern as the big cap Nas index gallops higher. We also see a volume pattern we don't often see as the sharp move higher was associated with one big JUMP in volume on the 'gap-up' day as the Index shot higher. Short-covering anyone?
Support for QQQ is noted at 73.6, then 72 even. A close below 72 suggests the stock testing 70 support. I'd buy the stock in the 72 area given a risk to 70 and upside to 76.
Now that the stock cleared prior potential resistance at 74.9 I can't point to any type technical resistance before 76.5 currently, at the top end of QQQ's broad uptrend channel.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) chart is bullish and RUT has been again a key Market bellwether for the major stock indexes, especially as RUT leaped above its key resistance at 1000. 1065 is a next 'resistance' I can suggest, at the top end of RUT's broad uptrend channel.
Near support is at 1020, extending to the 1000 area. I look for RUT to continue to work higher but without enough further upside potential in my estimation to take on NEW bullish positions. Risk to reward in that equation looks too close to equal 50/50 for me.
GOOD TRADING SUCCESS!