THE BOTTOM LINE:
The S&P made a weekly chart key upside reversal, the Nasdaq quickly popped back above technical support and the Dow made a double bottom low.
The S&P Volatility Index (VIX) has 'topped out' now twice in the same area, both times associated with lows. We can't always make this kind of correlation (with bottoms) but this recent pattern is of interest. It was almost as if VIX formed a double top and this 'signaled' another potential bottom.
Also quite telling in terms of an upside reversal was seen with the S&P 500 weekly chart next. A 'key' upside reversal is, by my more 'stringent' definition, is a new low (often a decisive new low), followed by a Close above the prior 1-2 bars high(s) on whatever chart time frame.
As noted above, the Dow 30 (INDU) formed a double bottom low in terms of its daily chart pattern as will be highlighted further on as part of the INDU commentary.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) chart was in a short-term corrective pattern and dipped below its long-standing up trendline, but then reversed higher from the 1646 area, a level ABOVE its prior downswing low. The pattern of higher relative lows is the definition of an uptrend in fact.
Bullish sentiment hasn't immediately spiked higher which is moderately bullish as far as my key technical indicators. SPX has rallied back above the key shorter-term moving averages of 50 and 21-day duration.
I've noted near support back at the trendline in the 1670 area. SPX looks headed still higher.
I've highlighted resistance back in the 1730 area where SPX topped out previously; next resistance comes in just a bit higher, in the 1740 area at the upper channel line. On a long-term weekly chart basis (seen above), resistance looks to come in just over 1800.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart is back above its prior up trendline, where in fact I've noted near support at 748. Next lower OEX support is anticipated at the prior 733 intraday low. The key technical/chart aspect of this recent low is that it formed ABOVE OEX's prior (down) swing low, which is bullish on an intermediate-term basis.
Given the present trajectory I anticipate OEX working still higher. I've noted resistance back up at the prior intraday top in the 772 area; next resistance is highlighted at the upper trendline around 776.
OEX got with a hair's breath of a fully oversold (RSI) reading, which also is a good omen for a bottom. It remains to be seen if the prior recent intraday highs will be exceeded. On a weekly chart basis (not shown) technical resistance doesn't look to come in until the low-800 area.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU) chart was bearish coming into this past week, as INDU neared its prior lows in the 14800 area, which was a key potential technical support. As seen on the INDU daily chart, INDU formed a double bottom low which is a very potent sign for at least a tradable, if not 'final', bottom for the move. The prior double top, although only approximately in the area of the initial high in the area of the prior relative high, was a potent 'signal' for a tradable top.
INDU popped back above its 50-day moving average, but not yet above the 21-day. Besides this potential immediate overhead resistance I've noted technical resistance at what was prior support in the 15400 area. Next pivotal resistance is seen at 15700, the area of the 9/18-9/19 prior top.
A move still higher looks likely ahead but I'm mildly, not wildly, bullish based on the number of INDU stocks in strong uptrends. Besides the relative handful of the 30 stocks in the Dow that were in strong bullish uptrends coming into this past week (i.e., BA, NKE, UNH, MMM and V) I'd add DIS, JNJ, MMM, MSFT, VZ, WMT as holding up or coming back up relatively well.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) Index chart remains bullish. There was a day spent below the 50-day moving average, as part of the relatively shallow dip, but that was the extent of the recent decline as COMP quickly rebounded back toward the area of prior highs.
Key near resistance is at the prior 3819 intraday high, with next implied resistance just overhead, at 3845-3850. Near support comes in the 3700 area, extending to 3650.
I anticipate a re-test of the line of prior highs in the 3819 area and perhaps the upper channel line as well. However, longer-term technical resistance extends to the 3955 area, extending to the key 4000 level.
My longer term outlook for COMP is that COMP might be at or near a top in the coming month, to be followed by a deeper correction than seen to date. I don't think tech stocks are going to just keep going up indefinitely, but much depends on avoiding a debt default and secondarily, ending the government shutdown.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) chart remains bullish. The recent dip was relatively shallow, with only a day spent below the pivotal 50-day moving average. My '1-day' rule relating to moves below support is that just a SINGLE day below a technical support is not usually significant in the face of a strong recovery rally.
Immediate support is suggested at 3180, extending to 3160, then to the recent intraday low at 3118.
Overhead resistance is seen in the 3250-3256 area, extending to the upper channel line, currently intersecting at 3282. Resistance implied by the longer-term weekly chart (not shown) isn't seen until around 3430 currently.
A re-test of prior highs seems likely, at a minimum. Ability for NDX to hold above 3180, support implied by the beginning of the recent upside price gap, is an important level to watch to gauge the relative strength of the recent rebound.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 (QQQ) chart is bullish for the same reasons as the underlying NDX pattern. The QQQ chart here suggests that the prior recent 79.7 high will be re-tested at a minimum, with a possible move to next resistance suggested by the upper channel line currently intersect in the 80.4 area.
Near support is seen at 77.8-77.4, extending to 76.3.
As is the usually price-volume pattern with QQQ, the biggest volume spike was seen on the break below the 50-day moving average. On Balance Volume (OBV) finally turned higher which is bullish in terms of a volume 'confirmation' relative to price action.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) chart is bullish. A key upcoming test for the staying power of this recent rally is found at the prior 1088 high. Next resistance is well above this prior high, in the 1130 area, at the upper end of RUT's uptrend channel.
On the recent low, RUT got very close to what I consider a 'fully' oversold condition in terms of the 13-day Relative Strength Index (RSI) which tends to be related bullish sign for a bottom in RUT. In the current bull market, RUT rarely has gotten oversold by this measure. When it has, it's been a good indication of a tradable bottom; of course this is the case when also accompanied by a strong rebound.
Near support is seen at 1060, extending to the 1040 area.
GOOD TRADING SUCCESS!