THE BOTTOM LINE:
The S&P 500 (SPX) is solidly back in its 1820-1900 trading range and by week's end Nasdaq was backsliding from its recent rally.
It's pretty much what you would expect. The blue chip stocks didn't have as much speculative excess to 'wring out' as the Nasdaq Composite (COMP) and the Nasdaq 100 (NDX). So, SPX and the Dow (INDU) are back comfortably in their prior trading range and I expect that's where they'll stay for awhile.
Investors have gotten more risk-adverse lately after some key tech stocks crumbled. This makes them LESS inclined to sell the blue chips aggressively but selling in tech stocks isn't all over. The key COMP and NDX trendline is seen on those charts. On the Nasdaq EFT stock (QQQ) mimicking NDX, you'll see QQQ reversing lower after hitting its March to mid-April down trendline on Thursday of this past week.
I look for COMP support between 4050-4000; in NDX, support 3500-3450. There's likely buying interest/support in SPX in the 1840 area and in the big cap S&P 100 (OEX) around 815-810.
If there's more selling pressure on Monday and there may be residual selling, by Tuesday the major indices would be by then oversold on a short-term basis; specifically, on a 21-hour time frame. We could see a rebound coming up but a MAJOR move isn't likely.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) Index is solidly back in its trading range seen from mid-February on. During that period SPX has mostly traded in a relatively narrow 1840-1880 range. This past week it looked like the Index was going to again climb to the 1900 area, but failed to hold over 1880 before dropping back to the area of its 21-day moving average.
On a trading basis, the 21-day average is a good milestone. Closes above this average suggest upside momentum and closes below the reverse. We've got the 50 and 21-day averages converging here around 1860. Closes of more than a single day below 1860 suggests selling is ascendant.
Technical support looks like 1840, then at the lower (up) trendline as highlighted on the chart. Resistance is noted around 1880, extending to 1900.
A TELLING indicator: Strategic information is suggested by the jump in bullish sentiment early in the past week as seen in quick jump into the bullish 'extreme' zone which I define as 'overbought'. Here, it looks like OVER-eagerness to bet on more upside, but before all the tech fallout is over. You have to assume 'fallout' as for the first time in a long time, COMP and NDX retraced ALL of their prior upswings. My "CPRATIO" ratio line is seen at the low end of the chart.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart into mid-week was showing the big cap S&P index past the recent short-term decline. That decline of course was within OEX's long-standing uptrend channel as highlighted on the chart. Slippage on Friday to a new weekly low looked most like spill over selling from the Nasdaq.
OEX would show upside potential above 824 and the level of the 21-day average. Support from 824 to 820 is suggested by the investor-important 50-day average. More than a single day with OEX below 820 suggests the Index could again test support/buying interest around 810, with support extending to 805-800. I'd be in bullish positions on a dip to 810 and under; exiting stop-loss at a close below 805.
Near resistance is seen from 830 to 834; next resistance is suggested at the prior 836-838 highs.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
Here's the line up on the Dow 30 (INDU) stocks in terms of the number of Dow stocks that are showing current upside momentum, whether that is from a move to new highs or not. I don't tend to count the number of INDU stocks in big declines. There aren't that many in a market like this anyway.
To remain bullish such as wanting to stay in/exit DJX calls, I like to see 15 or close to half of Dow stocks trending higher. We have 14 by my current analysis showing recent to longer-term upside momentum; i.e., CAT, CSCO, CVX, GE, INTC, JNJ, MMM, MRK, MSFT, PG, TRV UTX, WMT, and XOM so performing recently.
With the 14 (give or take 1-2) bullish 'count' here I've got enough to keep me mildly bullish on the Dow but the Close below the 21-day average bears watching. If support suggested by the 21 and 50-day averages at 16375-16300 gives way for a couple of days running, INDU may be headed to the 16200 area again; next support is 16050.
Near resistance is seen around 16450-16500, extending to the 16600 area.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite Index (COMP) had a kind of 'lumbering' rally up.., well not even up TO its down trendline currently intersecting at 4200. It's still up to buyers to step up or stay out as it's common that first rallies after a more seismic decline, often will be followed by another wave of residual selling. COMP hasn't had as big of a correction as the one concluding recently at 3950 (relative to peak levels over 4350), since before November 2012.
The steep rate of weekly ascent over the past 12-15 months, relative to most bull markets, was an unusually steep ascent and those kinds of accelerated trends don't typically have as long a life as the one culminating at the most recent COMP top above 4350. Unless the most recent tech mega-rally was/is a major bubble, but I don't see it.
Key COMP resistance is at 4200 at the highlighted down trendline. Assuming an upside breakout, next resistance the 4300 area.
Near support/buying interest is seen around 4050, extending to the 4000 area. Dips below 4000, such to 3950, but only briefly as an overreach, should be well supported.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) chart remains at least short-term bearish as NDX failed to continue its advance to above a down trendline dating to the early-March peak. The downside reversal in the 3600 area close to what would have been the 'breakout' point (currently at 3620) is not a coincidence. Some significant selling this past week reflects the reality of us having been through a fairly hefty shake out in the big Cap tech stocks comprising the NDX. This recent shake out has only recently occurred and the tech market is not yet settled from the recent capital flight.
Saying again, pivotal near-term resistance is 3600-3620. A fact I note by seeing I didn't even put a resistance symbol ABOVE 3620. My bad.. Next resistance would be back to the early-April rally highs in the 3675 area.
Support I've noted at 3500, but that extends to the 3450 area given another down note bearish news story. I don't anticipate NDX falling under 3450, at least not for longer than a day and especially not on a weekly Closing basis. The Index could easily work into the 3500-3450 area but seems more likely do so on short dips and part of some further base building.
Fly in the Ointment: Further rallies into the 3600 without going higher would start to look like formation of a Right Shoulder of a big Head & Shoulder's Top. Just sayin!
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) saw a recent short-term downside reversal when QQQ's high reached the minor down trendline drawn through the various descending rally highs occurring after the March top, continuing through this past week.
I don't anticipate the stock going above 88 in the near-term and it could easily dip another point to 85. Next support is 84-83.5.
Near resistance is highlighted at 88, extending to 88.7
After a substantial sell off, the Nasdaq indices have bounced back, with 'bounce' being the key word. It's a bounce, not yet a renewed uptrend until QQQ pierces 88 and keeps going, especially to above 89-89.5.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) remains in both a short, not yet an intermediate-term, downtrend. An intermediate downtrend would look to have begun on a Close below the prior 1083 intraday low or Closing low of 1093. RUT's recent brief dip to under 1100, followed by a strong rebound, shows buying interest/support, at what could remain a sizable double bottom in the 1100 area.
I've highlighted near support as 1120, extending to 1100-1090.
Resumption of upside momentum occurs on a move above 1140-1143 currently. Next resistance is seen at 1160.
I anticipate RUT seesawing around working sideways to lower for the coming week and also good to strong buying interest in the 1100 area. A sustained move below 1080 and the intermediate RUT trend reverses to down.
GOOD TRADING SUCCESS!