THE BOTTOM LINE:
I have to be bullish with the breakout of the Composite and the Russell 2000 to new highs. Yet to come is whether tech strength can pull up the broad market.
I'm safest in the current still-nervous investor climate, and some waning summertime interest, to steer you to my individual commentaries below.
The S&P 500 Volatility Index (VIX):
No change in my view to buy the VIX index in the 12 area and exit in the 15.5-16 area. The trading range market of the past 3-4 months has not generated VIX readings above 16, at least not for long.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX) DAILY CHART:
The S&P 500 (SPX) remains bullish. This is seen visually with recent lows rebounding from the exact low (support) end of SPX's broad uptrend channel. A next suggestion of upside momentum came by the Index piercing its down trendline.
Resistance aspects are selling pressures likely in the 2120 area, on up to the 2130-2136 zone. Above this zone of prior highs, further resistance at 2147 to 2150 is suggested at the high end of SPX's broad uptrend channel. On the support outlook, look for pivotal near-support at 2100, extending to 2090. Trendline support comes in just under 2080.
SPX appeared to have bottomed around the time of the Relative Strength Index (RSI) having reached a 'fully' oversold reading. From such 'extremes' at the low end, its common to see an eventual move back up to the UPPER end of the price channel.
A decisive upside penetration above the 2130-2135 area is what will signal the overall market as out of the doldrums or having priced in any overseas bearish negative. Given such new highs I don't measure major further upside potential; e.g., 2147-2150.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart is bullish as the Index continues to track higher within its broad uptrend channel. Recent lows at the low end of its bullish channel 'confirmed' so to speak the broad uptrend that OEX is in. The OEX in fact spiked higher after the Index found support in the area of its up trendline which also forms the low end of OEX's uptrend channel highlighted below.
Next up for the bulls is whether OEX holds near support at 935 and can climb above resistance at 935-938 or not; if YES, upside potential is to the top end of OEX's uptrend channel intersecting at 947 into next week at 950. If NO, we could see another sideways trend between 935-938 down to the 915 area and back up.
925 is near support, extending to 920 and finally back to OEX's up trendline in the 915 area.
THE DOW 30 INDUSTRIAL AVERAGE (INDU); DAILY CHART:
The Dow 30 (INDU) is bullish in its longer-term trend but faces tests of support in the 18000 area and of resistance at 18100-18200. Assume 18000 gives way: next support is seen at 17900 then at 17800-17780, at INDU's up trendline. Conversely, a sustained advance above 18200 suggests potential to 18370-18400.
The Dow found substantial support/buying interest at the low end of its uptrend channel at recent lows. Given this, INDU's uptrend may be 'confirmed' technically but remaining is whether the Average can maintain recent upside momentum; OR, is likely to see more of the sideways/lateral trend of the past few months.
It looks like a tough chore in the coming week for the Dow to climb above 18200. When/if 18200 gives way fairly major resistance comes in at prior highs in the 18350 area on up to 18370, highlighted at the top end of INDU's broad uptrend channel seen below.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) is bullish and has been bullish for the period shown as is visually seen in the uptrend channel within which COMP is trending higher. The most recent move to new highs after a gap move above the 21-day average suggested a new up leg in the Composite has begun.
Near resistance is seen at 5150; more of an 'ultimate' objective and next resistance comes in around 5200, at the upper end of COMP's uptrend channel. I anticipate further upside for COMP from current levels, but it wouldn't negate a bullish view to see a pullback to the 5100 area. 'Better' so to speak chart strength is suggested when prior resistance 'becomes' next support.
Support below 5100 is highlighted at 5050; fairly major support is suggested at COMP's up trendline intersecting in the 5000 area and the low end of the uptrend channel seen below.
Trader sentiment remained more or less neutral into the end of the week, which is a surprise since the Index broke out above prior key resistance handily. Emm, traders should learn technical analysis! As a bull on tech in here I'll feel strongest in long positions when a good-sized rally, a breakout move, doesn't shift bullish trader 'sentiment' above mid-range in my CPRATIO indicator. When everyone gets wildly bullish get wildly cautious!
NASDAQ 100 (NDX); DAILY CHART:
The big cap Nasdaq 100 (NDX) is bullish and currently trading midway within its broad uptrend channel stopping again at twice prior resistance in the 4550 area. Given that the broad Composite (COMP) Index has achieved recent new highs, the question seems when not IF the big cap Nas 100 pierces the line of resistance at 4550-4560 and begins a new up leg such as could carry the Index to 4600 or higher like near 4650 and my highest upside objectively currently.
Dips to 4490-4500 should offer initial support with stronger deeper support suggested at 4450. The low 4400 area offers fairly major support. Just as a sustained 'breakout' above 4550 is bullish, a 'breakdown' below 4400 is intermediate-term bearish.
A low VXN and 'neutral' RSI mid-range reading are indicator support for the idea of 'room' on the upside for NDX.
The NASDAQ 100 ETF STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) is bullish given its rebound from its up trendline and subsequent move above its 21-day moving average. (Note: an internal up trendline is one that connects the MOST number of prior lows and often 'cuts through' some prior lows.) QQQ, like NDX and unlike the broad Composite Index, has not yet achieved a new high which in QQQ is above 111.
The pattern here could be seen as a possible triple top. We don't see all that many triple tops in the indexes, unlike the more common 'double top'. Often a third approach to a prior resistance is going to end up in an upside breakout in the major indexes; in individual stocks, less so.
112 looks to be a next resistance. Fairly major resistance comes in around 114. Near support is highlighted at 109, extending to the up trendline currently intersecting in the 108.3 area.
Thursday's strong rally occurred on a sizable jump in daily trading volume which is unusual in the Q's where volume spikes come more often on sizable downside reversals. The volume spike along with prices suggests traders may assume new highs will be made. A sustained new up 'leg' would be suggested on a breakout above 111 if this area then 'became' support on subsequent pullbacks; prior resistance, once penetrated, often 'becomes' new technical support. Stay tuned.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) chart continues bullish, especially so now that RUT has pushed to a new high above prior resistance at 1275-1278. RUT is also continuing to follow the Nasdaq Composite in its mirror move to a decisive new high in the current advance.
RUT will likely encounter significant technical resistance at 1290-1292, at the top (resistance) end of the Index's uptrend price channel. Next resistance looks to come in at 1300. Near support is highlighted at 1270, although initial support may come in around 1280. Trendline support is seen in the 1260 area.
Another technical aspect seen below is that the 13-day Relative Strength Index/RSI is at an initial overbought extreme. RUT has a tendency for downside corrections, or upside trend reversals, at 'extremes' at either end of the RSI scale.
For those who have profited from RUT's steady advance dating back to early-May, it looks advisable to take money off the table. This isn't to say that it's also time to play the downside. Maybe for if seen, especially back to the up trendline around 1260; or, on a greater give back of prior gains such as to the 1240 area, which would represent a 62% Fibonacci retracement.
GOOD TRADING SUCCESS!