THE BOTTOM LINE:
The S&P 500 and the Nasdaq reached new 4-week Closing highs. A breakout above 1900 looks likely ahead in SPX and the Composite has a bullish technical outlook now that 4000 is holding and COMP got oversold on an 8-week basis.
THE BIGGER (WEEKLY CHART) PICTURE:
S&P 500 (SPX) WEEKLY CHART:
The S&P 500 (SPX) on a longer-term weekly chart basis is bullish as SPX continues its steady 2-year advance within SPX's well-defined uptrend price channel as highlighted below.
More recently, the Index looks bullish after two recent consecutive weekly lows formed at 1814-1815 and which tended to 'confirm' support in the area of its long-term up trendline. Moreover, the 8-week Relative Strength Index (RSI) got to a 'minor' oversold condition, a reading or close to it that has been associated with prior upside reversals since June of last year.
SPX's daily chart also looks bullish as will be seen further on.
NASDAQ COMPOSITE (COMP) INDEX WEEKLY CHART:
The Nasdaq Composite weekly chart looks bullish for similar reasons to the S&P seen above in that COMP also successfully 'tested' its long-term up trendline as it held at that line of support. Moreover and unlike SPX, COMP got down to what I consider a 'fully' oversold extreme in terms of the 8-week RSI. This is the FIRST time COMP has reached such an extreme since its mid-November 2012 low.
Moreover, COMP has shown good support/buying interest in the 4000 area. A couple of weekly lows fell below 4000 briefly but buyers were there and selling dried up significantly. The daily COMP chart seen further on also has some other bullish aspects, namely a likely double bottom, which is especially apparent on the big cap Nas 100 daily chart.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX) DAILY CHART:
The S&P 500 (SPX) Index is again nearing the upper end of it's trading range dating from mid-February. The question, especially after Friday's relatively weak close, is whether SPX can achieve a decisive upside penetration of the upper end of this range by going above 1897-1900.
Based on longer-range chart and indicator considerations as highlighted above in my initial 'Bottom Line' comments, I'd say yes. If so, it would not be a bullish negative if the Index then dipped to establish a new support area at 1900 breakout point and the common phenomena of prior resistance, once exceeded, 'becoming' subsequent support. Once there's such an upside breakout, those looking to get in will buy dips back to where they might have been previously selling, looking to break even and fearing to miss out on a new up leg.
What has finally come stopped recently is repeated jumps in bullish sentiment such as seen on 3 prior occasions highlighted by the 3 red down arrows in my CPRATIO indicator. Traders finally seemed to have reined in their most bullish impulses as tech stocks have gotten slammed repeatedly and as Q1 economic activity in the mainstream economy was weak due to the Siberian winter transplanted to the USA!
Initial resistance as already noted is at 1897-1900, extending to around 1925, then in the 1960 area after that. Near support is at 1860, extending to 1850, then to the current intersection of SPX's up trendline at 1820.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) is bullish with OEX trading back above its 21 and 50-day moving averages, but traders fear the possibility that the big cap S&P 100 stalls out at the prior top.
At most, I envision a pause or minor pullback only at/from the prior 838 top and a likelihood of OEX making new highs for the current advance. Above 840, next resistance is projected in the 850 area. Eventually OEX should be able to reach 870 and above.
Near support is noted for 825 and in the area of the aforementioned two key moving averages. Next support is at 815, extending to 805 and the prior cluster of lows in that area. Fairly major support should be found on a pullback to OEX's up trendline.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 Average (INDU) appears also to be locked into a trading range and investors are leery right now of buying in the 16600 resistance area which would push INDU through it. Technically also, the Dow had looked like to could be forming a Head & Shoulder's top with a 'Right Shoulder' forming in the 16500 area, but the rally kept going and formation of that top/bearish pattern no longer looks valid.
Support is highlighted at 16450, extending 100 points lower to 16350; next support then is seen at 16200.
Near resistance is at 16600-16630; next resistance then is projected at 16850.
Now I know what INDU stocks 'win' when I pay prices well over $4 at the pump! CVX and XOM are going up with those inflated gas prices; along with strong moves being seen in CAT, INTC, JNJ, KO, MMM, MRK, MSFT (didn't we 'write' off old 'dinosaur' Microsoft in years past?), TRV, and UTX.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite Index (COMP) is bullish on a long-term basis but has been mixed to bearish on a short to intermediate-term basis. Longer-term price and indicator patterns I pointed out on the weekly COMP chart in my initial 'Bottom Line' comments above lean bullish. And that COMP can and will break out above that pesky down trendline intersecting currently at 4185 as highlighted below.
There are other potentially bullish patterns seen on the daily chart here also: 1.) A bullish stair-step pattern of HIGHER relative downswing lows off the recent bottom, which forms a potential and (technically) 'potent' double bottom pattern.
2.) The absolute recent low held the area of its 200-day moving average and is another potent indicator in maintaining a major bull market trend.
3.) Lastly, traders finally seem to have STOPPED assuming that every rally was a big new bull move. My CPRATIO sentiment indicator finally stopped showing upward 'spikes' in bullishness.
That all said, COMP still needs to bust out above 4185-4200 resistance. Next resistance is seen at 4250-4285. Near support is highlighted at 4050, then at 4000, which is a major current support for the bulls to defend.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) is knocking at the door of a potential upside breakout above NDX's March-May down trendline, currently intersecting in the 3600 area which appears to be 'acting as' technical/chart resistance based on Thursday-Friday's trade.
I see the pattern as emerging bullish in that the Index is trading back above its 21-day average; next up is the key 50-day moving average which needs to be pierced to suggest continued upside momentum. A measured move objective, where a SECOND advance would equal the first upswing off the likely NDX double bottom, low (3419) could carry NDX next to the 3675-3700 resistance zone.
Near support is highlighted at 3550, with next and fairly major support seen around 3500.
VXN continues to drift sideways to lower from the recent 22.6 peak with that high of a level in the Nas 100 volatility index, as in some prior high VXN readings over 21, suggesting a significant low could be at hand.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) saw the same deflecting pattern at its March-May down trendline as the underlying NDX Index. Only the resistance level is different, at 88.1 and also suggesting key near technical resistance. I assume that a breakout move will carry QQQ above 88-88.1. Next resistance then is projected at 89.1, at the previously broken long-range UP trendline. I've noted a 3rd projected resistance in the 90 area.
A 'measured move' objective, whereby a second up leg relative to the current second upswing could reach 91 if the two rallies 'measure' out to equal moves. But, I'm getting ahead of myself. First and foremost as a case of continued QQQ upside momentum is for a decisive upside penetration of 88.
Key support is highlighted at 86 even, extending to 85.
Daily trading volume has tapered off considerably relative to the crash below the prior up trendline back in early-April. On Balance Volume (OBV) is trending higher and one of two important related bullish volume patterns; the second being where major volume spikes on big sell offs signal a bearish climax low.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) shows a mixed chart as RUT struggles to gain upside traction. On the bullish side, RUT appears to have put in a key bottom in the 1100 area, which is above the last big downswing low, keeping the major UP trend intact. We see a pattern of higher relative lows off the recent bottom, which is mildly bullish.
Still, the Index is chopping around and has to clear 1145-1150 to gain some renewed upside traction. Next resistance comes in at 1160-1165, with the most pivotal technical/chart resistance suggested at 1175 currently, at the March-May down trendline.
Near support is suggested at the 200-day moving average, with potential support extending to 1100.
If you want to be positioned for a bullish Market rebound, pick NDX trade strategies over the struggling Russell 2000.
GOOD TRADING SUCCESS!