THE BOTTOM LINE:
Promising bottoming type action in the S&P and Dow occurred at their respective up trendlines, with just a single Close to date below trendline support; this included even the Russell 2000 (RUT). The Nasdaq Composite (COMP) and Nas 100 (NDX) traced out potential double bottoms, followed by good-sized rebounds from the area of their prior (mid-December) lows.
There are many cross currents in the current Market of course but the long-term ('primary') bull market uptrend remains intact. Therefore I continue to look for good-sized price dips to buy into such as with pullbacks that rally from technical support such as suggested by up trendlines (the S&P and Dow). Moreover, Nasdaq bottoming prospects occurred as these Indexes 'held' and rebounded from their mid-December lows, setting up potential double bottoms.
The recent lows also were accompanied by 'oversold' RSI readings. In our multiyear bull market, oversold 13-day Relative Strength Index readings often suggest that the major indices are at or near bottoms.
Seasonally, January can bring 'whippy' price action as prospective Q4 earnings are assessed. Stay tuned!
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX) DAILY CHART:
The S&P is in a mixed near-term trend but with promise that a low may be in as SPX has to date basically held its up trendline at this past week's lows. My 1-day 'rule' is that a single Close below an up trendline (or a moving average support, etc), followed by a rebound suggests potential for a bottom. Two consecutive such Closes, not so much.
Also suggesting potential for a bottom was an oversold reading in the RSI and a single-day dip to a similar, but different type, of 'oversold' in terms of bearish sentiment.
A bullish aspect is seen also if SPX continues to hold at, or trades above, its 21-day moving average.
Support is highlighted at 2030, at the up trendline; fairly major support begins at 2000. Chart resistance begins at 2080 and extends to 2105.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart pattern also looks like a low may be in for the recent pullback. I refer you to my S&P 500 comments above. The charts and technical patterns mirror each other. OEX came close to tracing out a double bottom, which is more clearly in evidence in the Nasdaq charts. As with SPX, the big cap S&P 100 also got to an oversold RSI reading at its low.
Near support is seen at 894 at the OEX's current up trendline, with next support in the 880 area at the Index's prior recent intraday low.
Near resistance is suggested at 920, extending to 924. 940 is fairly major expected resistance, at the upper 'resistance' (red) envelope line.
THE DOW 30 INDUSTRIAL AVERAGE (INDU); DAILY CHART:
The Dow 30 (INDU) Average also has the same potential bottoming pattern as SPX and OEX in finding support at INDU's current up trendline, currently intersecting at implied support around 17570. Next Dow support is at 17400.
The Dow is back above support implied both its 21-day and 50-day
moving averages. 'Holding' at and above its 50-day moving average is an important area for the Dow and widely watched on the Street, not just by technically oriented traders.
KEY near resistance is at 18000, extending to 18100-18150. A couple of back to back Closes above 18000, then 18100 would be bullish development.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) is mixed and in a sideways trading range but the low end of that range has likely been seen with the approximate double bottom low that formed in the 4550-4560 area in mid-December and this past week.
COMP has rebounded to back to its up trendline and to above its 21-day moving average which suggests bottoming action at least. It remains to be seen whether there potential for an UPSIDE breakout above the upper end of the aforementioned price range at 4800-4815. Next resistance then is projected at4900-4935.
COMP got oversold in terms of its 13-day Relative Strength Index at the recent low and my (CPRATIO) sentiment indicator is neutral in that there's no excess trader bullish OR bearish 'sentiment'.
NASDAQ 100 (NDX); DAILY CHART:
The NDX 100 (NDX) chart is similar in its technical/chart pattern compared to the broad Composite. The technically important double bottom traced out in NDX is more exact if anything, forming twice now at 4100.
NDX is back in the area of its up trendline as well as resistance implied by the 21-day moving average; the Friday Close not being above these chart and indicator aspects. A bottom may be in but the ability of NDX to mount a sustained rally is uncertain heading into the coming week. I think NDX can again get back TO the upper end of ITS trading range by a move again up to 4300-4323-4350 zone where NDX has consistently topped since late-November.
IF NDX started closing above 4300 and found support around 4245-4250 the Index would start to look capable of a new up leg, such as a rally that carried to 4480-4500.
Conversely, a decisive downside penetration of 4170 and especially to below 4100 for a period of a couple or more days would be bearish and suggest potential back to fairly major support in the 4000 area.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The QQQ chart/indicator pattern is similar to the underlying NDX except that the way its up trendline is constructed shows clear cut current resistance implied for the 104 area. This level bears watching for 'confirmation' of some further strength or, if QQQ is turned back from this level, as a 'sign' of further weakness ahead.
Near support is at 102-101.6; with key support back at the 100 level where a potential double bottom formed relative to the mid-December lows and this past week in the 100 area.
Near resistance, as mentioned, is at 104, then 105.2, extending to 105.8-106.2
On Balance Volume (OBV), which is an important directional volume indicator, is trending sideways to lower currently.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) chart is bullish in its overall chart pattern. This market segment has shown more weakness in the past than the overall market but has been doing better since then. RUT broke out above its prior 1140-1190 trading range with the move to 1250.
Subsequently, RUT then pulled back to the 1160 area and rallied to near 1200. If the Index can climb to 1200 resistance and above again, it could then re-test its prior top around 1220. Near support is seen at 1176-1180, with next support at the 1153 intraday low of this past week.
RUT would maintain a bullish chart by holding above its up trendline going forward. It has held this trendline with the exception of the lowest recent intraday low. The following day RUT rallied back TO this line and then cleared is subsequently.
GOOD TRADING SUCCESS!