THE BOTTOM LINE:
In a wild day Friday Nasdaq gave back more than its advance in the prior 6 sessions. I would also point out that the important Nasdaq 100 (NDX) hasn't yet fallen below pivotal technical support at 3500-3527.
My daily NDX chart will also feature the Nas 100 Volatility Index (VXN) which ended Friday at 18.8; no dramatic rise there only VXN moving gradually higher from the 15 area in early-March. If/when VXN gets to the 20-21 area, the profitable next trade is often to bet on a low and a next move higher.
The S&P and Dow in moving to new highs but Closing under their prior 3 days' Lows made for key downside reversal patterns.
Again looking at volatility 'triggers', the well-know S&P 500 volatility index ended this past week at 13.9. VIX has been coming down from near 18 in mid-March. When VIX gets down to the 12 area, SPX/OEX bullish strategies should be evaluated. That means of course also looking at price action to 'confirm' a possible bottom.
The standout indicator reading for me was Wednesday's hyper-bullish sentiment reading, with this indicator (CPRATIO) seen with my SPX and COMP charts, having a call to put volume ratio reading that spiked up to 2.1 on Tuesday, April 1. And, no fooling, a sure over-reach in terms of bullish expectations!
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) in moving to a decisive new high for the recent rally, followed by a Close below its prior 3-days' Lows qualifies as what can be called a 'key' downside reversal. It's usually pretty significant for at least an interim top.
SPX also remains well within its uptrend channel and the recent reversal should be categorized as a 'short-term' downside reversal until or unless there a retracement of more than 62-66 percent of the last major advance.
The most bearish aspect of my indicators is the Tuesday reading, which spiked to 2.1; whenever equity call volume rises above double that of that's day's daily put volume, there's 'hyper' bullishness so to speak.
The well-know S&P 500 volatility index ended this past week at 13.9. VIX has been coming down from near 18 in mid-March. When VIX gets down to the 12 area, SPX/OEX bullish strategies should be evaluated. That means of course evaluating price action to 'confirm' a possible bottom.
Look for support in the 1840 area, extending to 1830. 1800 continues to look having fairly major buying interest.
Resistance is seen at 1880, extending to the 1900 area.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart has, like the broader S&P 500, traced out a key downside reversal on at least a near-term basis. This should be seen in the context of a still strong dominant uptrend.
Heavy selling in the big cap Nasdaq stocks of course would spill over to the big cap S&P. It's more surprising how little that occurred in that OEX has only set back to its 21-day moving average, which is a moderate pullback so far.
OEX could easily fall to support in the 816-810 area and could hold there. Next support, 805. Expected major buying interest would come in on dips below 800, especially to the 793 area, anticipated support suggested by the current intersection of OEX's up trendline.
Near resistance is anticipated in the 830-835 zone. Next resistance is likely around 845.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU) daily chart shows a key downside reversal along with the S&P. I had been pointing out that somewhat fewer and fewer of the 30 Dow stocks remained in very strong uptrends; i.e., at just 8 last week, down from 10 in the prior week.
Heavy profit taking and panic selling in Nasdaq triggered significant selling in the bluest of blue chips represented by INDU. It's not only Nasdaq stocks that have seen substantial price rises in the past year.
Where to from here? Down but not out as INDU would likely have strong buying support on any decline to the 16200 area.
Conversely look for selling interest/resistance near-term in the 16450 area, extending to 16600.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite Index (COMP) has finally fallen under its uptrend channel, as it pierced it's up trendline on Friday. Still, COMP has only just fallen back to support I normally anticipate in the 62-66% retracement range. Major support begins in the 4000 area, but I currently think the 4100 area could hold up as support. Near resistance is around 4275, extending to the 4333 area.
Hyper-bullish sentiment readings of Tuesday, were a bearish danger warning sign so to speak. I've highlighted this in the CPRATIO line with the obvious spike to more than double equities daily call volume versus total equities put volume on this past Tuesday when bullish expectations were riding high on economic conditions.
Finishing with indicators, COMP is nearly back at an oversold RSI reading. All in all, I'm not major league bearish on COMP although I have to also calculate it reaching the 4000 area again if Friday just was part of the current selling interest.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) chart has the same continuing bearish pattern as the broad based Composite Index and NDX has fallen under its up trendline. Still, NDX may find decent support just under the panic selling low of Friday, extending to the 3500 area. The chart does not turn bearish on an intermediate-term basis absent a close below the prior downswing Closing Low at 3440.
Near resistance is suggested in the 3600 area and is highlighted at the recent down trendline coming in at 3667 currently; next resistance then is suggested just over 3700, around 3706.
I've added the Nasdaq 100 VXN volatility index chart this week. Implied volatility did not rise significantly this past week. VXN ended Friday at 18.8. It's been moving gradually higher from the 15 area in early-March. If/when VXN gets to the 20-21 area, the profitable next trade may be to bet on a low and a next move higher. NDX is again near an oversold reading in terms of the 13-day Relative Strength Index (RSI).
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) is bearish in the same way as the underlying NDX as it fell under its up trendline but hasn't yet broken near chart support in the 86-86.3 area. Stay tuned. Next support is seen at 85.
Resistance at the 21-day moving average was one tip off to the fact that the big cap Nasdaq was not able to break out to the upside. Big profits lead to big selling when threatened. Near resistance is highlighted below at 89; next anticipated resistance comes in around 90.5.
PANIC selling ruled the day Friday as some 'whales' headed for the profit-taking exit at the same time. Volume SPIKED in a major way.
I think the panic mode will not be sustained in the coming week as potential buyers regroup. Again, stay tuned on this!
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) is near-term bearish in its pattern, but with the Index still within an overall uptrend. I'd turn bearish on a sustained move below 1135.
The key test on a longer-term chart basis is what happens if RUT falls again to its long-standing and well defined up trendline, currently intersecting around 1135. Near support is 1147, extending to 1140-1135.
Near resistance is at 1170, extending to 1190.
GOOD TRADING SUCCESS!