THE BOTTOM LINE:
While the longer-term trend remains up, the past 4-month churn of multiple rallies, multiple declines continues. Since the late-February peak the S&P has seen 4 rallies and 5 declines; this last encompasses recent weakness.
The Nasdaq has had 4 rallies, 4 declines in the same period; it's not sure yet if we're really NOW in the midst of another period of much weakness in Nasdaq or not. If another decline takes the Nas Composite (COMP) to the low-5000 area, than COMP will have had its 'plunge' so to speak; down sharply from its highs of this past week and back to the area of its up trendline.
Stocks having a long-term up trend, even if there's been 'churning' in recent months, will continue to benefit stockholders over their 'investment' oriented horizon. A sideways trend with frequent up and down price swings will not always benefit options traders who profit from a dominant up or down trend.
You should recognize the see-saw period we're in and commit little to higher-risk strategies that depend for success on a strong directional movement over weeks and possibly months; e.g., the prolonged and steep advance into Q3-Q4, 2014 dating from lows in early-2013.
I'm generally staying out of the trading fray as I don't want to work as hard at watching the indexes intently, looking for every potential short-term reversal. Better to wait for a stock market trend that trades more on earnings trends than politics and the Fed.
The S&P 500 Volatility Index (VIX):
The VIX Volatility Index remains within the same trading range between 12 and 15.7-16. My view is unchanged to buy the VIX at 12 and exit in the 15.5-16 area.
An eventual breakout above 16 in a volatility 'spike' is a possibility but not anytime soon.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX) DAILY CHART:
The S&P 500 (SPX) is bullish in its longer-range trend but is in a 'churn' with more up and down price swings than usual than occurred PRIOR to the late-February peak. Since then SPX has seen 5 declines and 4 rallies. I'm counting recent weakness as a possible 'full fledged' decline such as SPX retreating again to its up trendline. After all, the rally back to the prior highs was snuffed convincingly and another fall to SPX's support trendline looks in play. In which case buy the dip.
Near resistance is highlighted at 2110, with pivotal resistance above at 2130-2135. Next key technical resistance is seen at the upper trend channel line currently intersecting at 2150.
Near support comes in at 2100, extending to 2090 and then to SPX's support/up trendline intersecting at 2080.
My short-term trader sentiment indicator, CPRATIO (most bottom part of the chart below) was suggesting risk of more downside to come by greater than average bullishness in terms of calls bought to puts on stocks just ahead of the last slam lower. That last dip to the trendline offered a buy side opportunity. This may come again if the Index falls to 2080 trendline support.
My sentiment model (CPRATIO) seen above is an attempt to gauge 'excessive' bullishness or bearishness implied by the daily ratio of call to put volume in equities options. 'Excess' points, even just a single-day reading, either on the upside or downside are often seen 1-5 days before a trend reversal.
S&P 100 (OEX) INDEX; DAILY CHART
Within the S&P 100 (OEX) overall advance or uptrend, there's been more than usual bounces back and forth between the upper and lower ends of OEX's broad uptrend channel.
It looks like we're in the midst of another downswing headed toward OEX's lower support trendline currently intersecting just over 915. I've noted support starting at 920 but it looks more substantial at 917-915. Even back to the 912 area would likely be a low risk buy, assuming a close by exit point that's adhered to.
Initial resistance/selling pressure may begin at 930 but pivotal resistance comes in at 935 extending to 938. A sustained move above 938 would have a possible target next to 950.
THE DOW 30 INDUSTRIAL AVERAGE (INDU); DAILY CHART:
MAYBE, at least for the Dow, I should write biweekly commentaries (every TWO weeks)! It works for the sluggish Dow 30 (INDU) sometimes. I wrote last week that the Dow 30 (INDU) is "bullish in its longer-term trend but faces tests of support in the 18000 area... Assuming 18000 gives way, next support is seen at 17900 then at 17800-17780." My not so unusual 'script' was followed!
I ended up concluding that what is "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."
More of a sideways/lateral trend is what's looking most likely ahead. 'Ahead' for me means usually looking out over a 2-3 week time horizon; an especially strong trend might see me with a strong 2-3 month view.
Near support in the Dow is at 17900, more so around 17800, extending to the low-17700 area. Near INDU resistance comes in at 18100, with pivotal resistance near 18200. Fairly major resistance is expected at 18350, extending to the 18400 area.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) is bullish in its broad advance within COMP's uptrend price channel. There have been fewer sustained rallies of late suggesting slowing upside momentum.
Look for buying interest/support in the low-5000 area. Initial support however is highlighted at 5050. Near resistance comes in around 5100, with pivotal next resistance at a line of recent highs in the 5160 area. Major resistance would look to come in around 5220 currently.
One way of gauging Nasdaq buying or selling opportunities has been, per a survey of the COMP daily chart below, to sell on moves to or near the upper channel and to buy dips to the lower trendline. The lower trendline is COMP's UP trendline and the key trendline in an advance; traced out by the pattern of successively higher pullback lows.
Thought for the day: When everyone gets wildly bullish get wildly cautious!
NASDAQ 100 (NDX); DAILY CHART:
The big cap Nasdaq 100 (NDX) is mixed in its short to intermediate term picture; i.e., looking out 2-3 days to 2-3 weeks. The sideways trend predominates currently, albeit within NDX's longer-term multiweek uptrend channel.
Lows continue to hold at higher levels but the two key rallies of late failed in the 4550 area which is bearish for those playing for more upside, ok if this was the high end of the range that maintains a profitable spread.
Strong resistance is seen at 4550 but an eventual break out move could carry next to as high as the 4650 area.
Chart/technical support comes in near 4400. Risk to reward considerations plus technical aspects favor bullish plays on dips to the 4400 area and lower such as toward or to 4350.
The NASDAQ 100 ETF STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) came under increasing selling pressure after the third inability to climb above 111 key resistance, making for a 'triple top' in this area. Sellers came in increasingly from mid-week on as buyers stepped back and then came the good sized plunge on Friday carrying the stock to below its 21-day moving average. Trade below this average suggests downside momentum predominating.
Technical support and bullish rebound potential is suggested at QQQ's up trendline at 108; support extends to 107.3
No doubt piercing 111 could trigger strong buying and set up a possible move, a next up leg, to the 113 area.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) hasn't seen more than a minor pullback recently from its very strong advance and the chart remains bullish. However, potential for a pullback to technical support in the 1263-1260 area has increased.
I wrote last week that "RUT will likely encounter significant technical resistance at 1290-1292, at the top (resistance) end of the Index's uptrend price channel." AND ... "For those who have profited from RUT's steady advance (dating back to early-May), it looks advisable to take money off the table." Seems so!
A strongly bullish chart would be seen in a continued rally from the 1280 area to 1300 and possibly above although seemingly unlikely without a pullback first. A still-bullish chart picture would result from a successful re-test of support at RUT's up trendline (1263-1260) followed by another rally. A neutral outlook ahead would be suggested in a sideways drift between 1280 and 1270. A sustained dip below 1240 flips the chart bearish.
Lastly, an overbought (13-day) RSI 'extreme' such as highlighted below, so often leads to a sell off in RUT that the same pattern is also probably 'dangerous'; as in, you 'bet the ranch' on it!
GOOD TRADING SUCCESS!