THE BOTTOM LINE:
The S&P Indices and Dow Jones Average held support at key weekly chart up trendlines. The Nasdaq pullback didn't even get close to trendline support on its recent pullback before rebounding. Advantage Bulls!
A chart picture is worth a thousand words and the S&P 500 (SPX) weekly chart is seen next, with its (lower) up trendline highlighted, as well as the corresponding upper channel line.
It was true in the prior week that SPX dipped below its trendline, but by the end of the week was above it.
Charles Dow in his time wouldn't have considered anything but the Close at the END of the day, END of the week. I look at intraday and intraweek lows and highs to help measure support and resistance areas and for use in drawing trendlines. But, I also always put most weight on where an Index or Stock CLOSES for the hour, day, week or month.
So far I consider the recent pullback a correction only, not the start of a reversal in the intermediate or long-term uptrends.
To date the key big cap Nasdaq 100 Index (NDX) didn't have more than a 25 percent retracement of its last major upswing an stayed well above its weekly up trendline. Corrections of between 25 and 33 percent are considered very 'minimal' and shallow pullbacks. NDX's weekly chart is also seen here.
More on the trend picture, support and resistance and price objectives are noted in my index commentaries below.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX) DAILY CHART:
The S&P 500 (SPX) Index is mixed on a short-term basis, bullish on a longer-term (intermediate) basis. I say 'mixed' short-term in that, while SPX rebounded after a 50% retracement of its last major up leg, the Index hasn't yet Closed above key overhead resistance at 1960. Back to back daily Closes above 1960 would suggest that SPX was regaining its bullish mo-jo.
Near SPX resistance is at 1960, with next pivotal chart resistance at 1980, extending to the prior 1991 intraday high.
Near support is highlighted at 1940, extending to 1930-1927. The Index closed above its 21-day moving average, which is a bullish aspect as long as its stays above this key trading average.
The S&P has 'throw off' its prior overbought condition both as suggested by the Relative Strength Index (RSI) on a 13-day basis (below) and also as seen above (in my 'bottom line' comments) on an 8-week time frame.
Bullish sentiment is now more mildly bullish and more or less 'neutral' as measured by my CBOE equities call to put daily volume ration (CPRATIO) seen at the bottom of the SPX chart.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) is mixed on a short-term horizon and remains bullish on an intermediate (and long-term) basis. OEX presents the same pattern as with the broader S&P 500. OEX did manage a Close above both its 21 AND 50-day averages. Stay tuned on this continuing.
A second (and third) Close above 870 is bullish; ditto resistance highlighted at 875. Next resistance is seen at the prior 886 intraday high.
Near support is at 860-857, then in the 850 area, at the steeper up trendline.
At the point where OEX got 'fully' oversold (see the RSI), a relatively low risk entry point for calls occurred. In a bull market, favoring big cap stocks, such low readings, along with price action first and foremost, aid in a bullish trade entry decision.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 Average (INDU) is mixed in that the recovery rebound hasn't yet taken INDU back above key overhead resistance at 16800. Next pivotal resistance is seen at 17000.
In retracement terms, INDU didn't fall as much as the S&P relative to its last major upswing, although that is figured a bit differently than the S&P by looking at the INDU Feb-July advance versus the April-July upswing in SPX. These two indexes traced out somewhat different patterns over the prior months.
The individual 30 Dow stocks are all over the place and I can't assess the bullish/bearish mix of the 30 as well as has often been the case.
Support begins at 16550, at the up trendline, extending to 16515-16500 with fairly major support suggested in the 16400-16375 zone.
2-3 consecutive closes above 16800 would suggest renewed upside momentum in the Dow.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite Index (COMP) is bullish in its pattern although a key test is ahead. COMP didn't fall as far as its up trendline before it rebounded from a cluster of lows that formed around 4325.
The subsequent rally shouldn't have been too surprising as COMP got down to near an oversold extreme in terms of the 13-day Relative Strength Index; in this bull market its been rare for the tech-heavy Nasdaq to fall to a 'fully' oversold reading; e.g., at or below the 35-30 zone.
COMP is now very close to a line of resistance at 4485 and so is nearly at its pivotal 'breakout' (or 'breakdown') point. Assuming a breakout move, next resistance is projected for the 4550 area.
Near support is at 4400, extending to COMP's up trendline currently intersecting in the 4330 area.
Bullish/bearish sentiment among traders is more or less neutral in my CPRATIO indicator. Bullishness among Investment Advisors is another story as a strong majority is bullish. However, from a trading perspective, high bullishness among Advisors is not usually relevant in 'timing' potential trading swings.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) chart is bullish, but like the broader Composite, the big cap NDX is near a key prior high. In terms of the big cap Nasdaq 100 that's at 4000. 4000 is a relatively big deal level as are prior 1000 increments in the Index. The law of big round 'milestone' numbers so to speak.
A couple of back to back closes above 4000 and importantly, the ability to hold 4000 on subsequent pullbacks, will be key for the bulls. Next overhead resistance then is projected for the 4050 area.
Support is highlighted in the 3900 area, extending to 3850. Fairly major support then comes at NDX's up trendline currently intersecting around 3800.
The prolonged and major advance may be getting 'old' in the Nasdaq and there's fear that the big tech/internet stocks are overvalued and all that. However, I can't evaluate the trend except to base it on the current price and momentum trajectory.
The 3850 area 'basing' action was key to the last juncture where the risk to reward outlook was favorable for a trade as a stop-out point could be set just below 3850. From there it was almost a given that 4000 would be re-tested, and probably exceeded, once traders were not so overwhelmingly bullish. Stay tuned on the part about exceeding 4000!
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) is bullish an I find it extremely telling that on this spurt higher, daily trading volume spiked up as well, a pattern rarely seen in the Q's.
Typically, spikes in trading volume, unlike company stocks, occur on breaks below perceived key support(s). I take Friday's jump above prior average daily volume as a good omen for a move to new highs.
97.5 is pivotal near resistance and 98.5 as next projected resistance.
Near support is highlighted in the 95.8 area, at the up trendline, a line that got pierced but which still looks like the predominate line measuring upside momentum. Trendlines do merely measure the current rate of change in up or down trends. The fact that this rate-of-change wobbles a bit at key junctures is not as important as the dominate trend. Fairly major support comes in at 94 even.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) chart which still looks bearish and capable of challenging its prior lows in the 1100-1080 area. RUT is the odd man out so to speak in the major indices as small cap stocks are out of favor currently. Well, for now anyway and RUT has had a sizable gain over the past 3 years; from the 635 area.
Key relative to upside possibilities and for the bullish/bearish near-term outlook is the ability (or not) for RUT to climb back above its 200-day moving average. There's resistance in the 1140-1150 zone, then at 1160.
Support is highlighted at 1130, extending to 1120. If this area gives way, there may be a re-test of prior lows in the 1100-1080 area.
GOOD TRADING SUCCESS!