THE BOTTOM LINE:
The Dow 30 (INDU) is back above its previously broken up trendline, which is bullish, but faces technical resistance a bit higher at 15400-15500. The S&P 500 (SPX) is rebounding from its November-August up trendline but may have limited upside to around 1700 or so currently.
Nasdaq looks to be in a new up leg but traders are 'too' bullish for my money and overhead resistance in the Composite (COMP), implied by the upper end of its uptrend channel isn't much higher, coming in around 3780-3800.
Bothering me from getting overly bullish here is the corrective pattern presented in a sizable August downswing in the S&P and Dow, followed by a limited recovery rally of about half of that earlier decline which looks a lot like the common pattern of a down-up-down (or 'a-b-c') decline, where remaining to be completed is a next and possibly larger down leg.
I'm the first to admit that technical analysis, which is my primary method of analyzing the major stock indexes, has some limitations. For example, in our present circumstances, the charts are 'blind' so to speak as to the possibilities ahead if a bunch of mad-as-hell ideological congressmen might (and seem ready to) shut down the government in the coming month, disrupting our massive government bond market and global leadership in finance. Investors run for the hills under these kind of circumstances. Who's going to keep bidding up stocks then?
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) chart remains in a 'mixed' pattern. The SPX chart is bullish in a broad sense in that the Index has held, and rebounded from, its multimonth up trendline. It's a mixed pattern in that we don't yet know if SPX can churn through a sizable resistance overhang implied the Head & Shoulder's top pattern of late-July to mid-August.
What happens, if anything, at near resistance in the 1700-1709 area is pivotal. I haven't noted any implied 'resistance' above 1700-1709, but SPX plows through this area, a next upswing could carry to 1740 at a minimum.
I've highlighted anticipated support only back at the trendline, currently intersecting in the 1640 area, but closer in support probably comes in at 1670, extending to 1660.
What confounds me in making a bullish case for SPX is how high bullish 'sentiment' (as illustrated above) has gotten recently per my CPRATIO Indicator. It's as if traders have gotten wise to the bullishness implied by a rebound from a long-standing up trendline. I don't believe that exactly and suspect that the sizable jump in bullishness is based on factors like relief on no Syrian intervention and oil prices dropping back some.
I can't account for the jump but don't try to. I look at this high bullish pattern as suspect for the bulls primarily because such high readings are frequently associated with tops; and, I work from historical patterns. I'd be surprised if this jump in my indicator is showing how 'right' traders in mass can be!
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart is mixed also, like SPX, more so even in that there's what I call a sizable supply (stock for sale) implied by the prior top. The bottom end of that top is at 755 and its no accident that recent highs stopped there. OEX can of course be consolidating for a decisive upside penetration of that 755 implied resistance. Stay tuned on that! Next overhead resistance then comes in 10 points higher, in the 765 area. Above that I'm not guessing right now at 'next' resistance.
Near support is highlighted at 746, then at 737, at the current intersection of the OEX's up trendline.
OEX could get to 765 again if 755 is pierced but I don't have higher objectives right now and would be leery of formation of a possible double top in that event.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU), as I noted in my initial 'bottom line' commentary, has Closed back above its previously broken up multimonth up trendline, which is bullish. Bullish that is as long as it continues back up into its former uptrend channel. If that's the case, I'm suggesting next resistance could come in at 15500, extending to the prior intraday high in the 15650 area.
Near support is now assumed back at the up trendline, at 15340, with next support looking like 15200. Fairly major support looks to come in at 15000.
There's been some bullish turnarounds, or continuation of prior uptrends, in a handful of Dow 30 stocks, namely BA, DIS, IBM, INTC, and UNH (I finally took Kraft out of my Dow stock list, only about a year after United Healthcare replaced KFT!). These few Dow stocks are so far not enough to suggest a sizable new up leg coming in INDU.
As far as changes to the Dow lineup, a week from Monday, is GS, NKE and V replacing AA, BAC, and HPQ. This change alone may account for the boost in INDU of late as at least NKE and V are showing stronger long-term up trends than the companies they're replacing. Goldman (GS) however looks to have built at least an interim top over June-August.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) Index is bullish as it rallied above prior resistance at 3700 and taking COMP to new highs for the current advance. What is not so bullish is the implication that there might not be much further upside IF the upper trend channel boundary is about the best upside ahead. Resistance in the 2780-3800 area may be a stopper on a further advance in the near to intermediate-term.
Near support is highlighted at 3650, with next support coming in around 3585.
We also can observe that COMP is back up near 'overbought' territory according to the Relative Strength Index (RSI) and is showing what I consider to be another type of overbought condition in the high bullish sentiment readings of my lowermost (CPRATIO) indicator. These key indicators also suggest to me that COMP may have limited further upside potential.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) chart is bullish in the same way described for the Composite, in that the Index decisively broke out to a new high. I see near resistance at 3180 and then not much higher at 3215 or so, at the upper channel line.
If there's a sizable move above 3200, there's no long-term resistance that I can project until closer to 3400. I don't see a new up leg getting up to levels like that anytime soon given that the Index is again approaching overbought RSI readings. It could happen of course but the 'normal' technical probabilities of such an occurrence are not high.
I've noted support back down at 3100, extending to 3070 in NDX. I could note an initial support in the 3150 area as what was chart resistance having 'become' subsequent support on pullbacks.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 (QQQ) chart is bullish like the underlying NDX and like the actual index, overhead QQQ resistance at 78.7 is not far above current levels, assuming the upper channel line 'acts as' a next technical resistance.
Near support is noted at prior resistance, in the 77.3 area. Next support looks to come in around 76. A pivotal support is next at 75 even.
I'm not counting on a next big advance in this ETF stock near to intermediate-term. However, it's also true that it doesn't look like there's major QQQ resistance coming in until near 83.
RUSSELL 2000 (RUT); DAILY CHART:
If the Russell 2000 (RUT) is once more acting as a bellwether for the overall market or specifically the Nasdaq, it's a dead canary in the coal mine perhaps, in that RUT has not yet (unlike Nasdaq) gone to new highs for the current move.
If 1060 is decisively penetrated, an advance to the 1080-1085 area looks possible. The recent spurt higher, followed by a narrow-range consolidation does have the appearance of a bull flag. So, stay tuned on RUT's next act!
Near support is seen at 1040, extending down to the current intersection of RUT's up trendline around 1020.
GOOD TRADING SUCCESS!