THE BOTTOM LINE:
The S&P and Dow look headed sideways to lower ahead, with about half of the 30 Dow stocks having decidedly bearish charts. The tech-heavy Nasdaq looks like this segment could fall further as the Nasdaq Composite (COMP) closed the week under 3600 support. Nasdaq retracements (of the last up leg) have been shallow so far however. There hasn't yet been the selling pressure we've seen in the Dow and S&P. If the Government shuts down we'll see if tech stocks are still holding up better than the S&P universe!
What I saw as bullish technically this past week? Not much of anything except that the S&P and Dow mostly stabilized after Monday's sharp drop. Also, the S&P 500 (SPX) so far has held support implied by its up trendline and the Nasdaq Composite is so far holding a 3580 line of support.
Trader sentiment as I measure it, isn't reflecting any deep-seated bearish outlook which makes me think traders figure September may come up roses after a nasty summertime bear snit. I don't quite believe it. I got bullish too soon myself also!
Fundamentally, and I don't usually delve into this kind of analysis, there are major questions out there about when the Fed stimulus might end and especially if the radicals are going to 'blow' the Markets up by not raising the debt ceiling.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) chart is bearish on a near-term basis. It would take a Close below the late-June bottom to turn the intermediate-trend lower. So far, SPX is holding within its broad uptrend price channel. SPX could rally from its up trendline and the RSI got 'fully' oversold which is supportive of that.
Unlike prior months' rallies from technical support and oversold conditions however the charts suggest 'indecision' in SPX, OEX and certainly the Dow. There're too many unknowns ahead, the worst of which is probably a government shutdown.
Key near support is at the trendline intersecting around 1630. Highlighted on my chart is suggested support in the low-1600 area, then at 1580. A Close below 1608 and certainly 1600 would reflect renewed bearish downside momentum and suggest that the late-June 1573 SPX Closing low could be re-tested.
Near resistance is at 1646-1650, extending to 1660. A move back above 1660 that established support in this area would be bullish.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart is pretty much a mirror of the S&P 500, as Friday's close held at OEX's up trendline. Next lower support, below the trendline, is in the 724-727 area, based on the 62-66% retracement zone. Pivotal next support then comes in at 703 (OEX's prior intraday low) to 708 and the Index's late-June Closing low.
Near resistance begins at 740, extending to 745; next resistance is seen in the 753 area.
I'm not hopeful that recent lows are going to hold, although OEX is 'oversold' and could rally short-term and then take another dive after that.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU) chart is the most bearish of the well-known indices. Number 1, INDU fell below its multimonth up trendline and number 2 has to date made the deepest retracement of its last major advance. It's often the case that retracements that EXCEED 2/3rds of the prior move, could be headed for a round-trip 100% retracement back to prior lows. 14551 was the late-June intraday low and 14659 was the low Close.
About half of the Dow stocks look noticeably weak/bearish. Such patterns could be from declines under key support(s), apparent top formations and so on. These are not necessarily Dow stocks that have been chugging along in more long-standing bear trends. In the category of more recent bearish-looking weekly charts are AXP, BA, CSCO, DIS, GE, HPQ, INTC, JNJ, MCD, PG, WMT and XOM.
Near support is at 14775, with next lower support looking like 14600-14550. Key overhead resistance is at 15000 currently, with fairly major resistance on a return to the previously broken up trendline currently intersecting at 15215.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) Index is correcting or pulling back from resistance seen in several highs that formed since early-August in the 3700-3684 area. COMP's pullback to date is relatively minor as the Index has retraced only about a quarter of its late-June to early-August advance. COMP dipped under its 21-day moving average which is a near-term bearish development. As to moving average considerations, more important is whether the Index will continue to trade above its 50-day average.
Support is highlighted at 3585 currently, extending to 3538. Next key support is at COMP's multimonth up trendline currently intersecting in the 3450 area.
Key overhead resistance comes in at 3650 currently, then at 3685-3700.
COMP looks more like an index still in decline as the Index looks like it has built a top. I doubt that the correction is going to be as shallow as it has to date.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) chart, like the Composite, appears to have 'built' or formed a top. It has somewhat of the appearance of a Head & Shoulder's top, albeit an 'irregular' one. Mostly irregular given the short-lived spike up to near 3150. Still the pattern looks like this kind of top, especially if you discounted the brief two day rebound above the 21-day moving average which then looks like a 'right shoulder' of a Head & Shoulder's. The other (bearish) shoe looks like it could drop ahead, especially if prices plunge below 3050.
Near support is suggested at 3050, extending to 3025. Technical support is then seen in the 3000-2987 area. Key overhanging resistance comes in around 3050. A move back above 3100 that was more long-lasting than the prior two-day blip above this level would suggest renewed bullish/upside momentum.
Ultimate downside potential is back to the 3000 area and possibly to a retest of trendline support in the 2950 area.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 (QQQ) chart is short-term bearish as QQQ trades under its 21-day moving average. Near support is at 75 even, the down closer to 74.
Upside resistance is suggested at 76.2 currently, then at 77.3, where this ETF was stopped dead in its tracks twice now, making for a short-term double top.
As with NDX, there's potential for another down leg ahead for the Q's. Watch 75 even for continued signs of support; or, not. If there's a decisive downside penetration of 75 even, a move to the 73 area might be underway. If so, a test of support implied by QQQ's up trendline, intersecting at 72 currently, is another possibility.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) chart is bearish in the short-term. The daily chart will look more bearish still if RUT's up trendline is pierced. Friday's close was right on the trendline. I anticipate that even if there's a short-term rebound, this line of implied support may well get pierced ahead.
Next support below that suggested by RUT's up trendline is at 1003-1000, extending to 988 to 980.
Near resistance comes in around 1040-1036 currently then up in the 1060 area.
GOOD TRADING SUCCESS!