THE BOTTOM LINE:
Retreats back to prior Closing lows hold more or less for now. Buying into prior chart/technical 'support' is normally a good idea, but it then takes actual sustained BUYING to see major index advances above prior rally peaks. As highlighted in my last week's comments, the Market has been in relatively narrow trading range over the past 9+ months in terms of the S&P 500 (SPX) Index; i.e., between 2050 and 2125. This isn't all that much in the major trend as there were 67 prior months of a gigantic SPX advance.
For a time I've been commenting on the S&P 500 Volatility Index (VIX) daily chart but nothing much is happening with VIX, as the Market continues to see mostly low volatility. I may resume a commentary on VIX when it actually makes much of a move. The lack of strong conviction on the part of would be buyers in a lackluster summer Market, coupled with limited selling/shorting, means that implied volatility is also not seeing big swings.
There's not much more to say about this Market from a technical standpoint. The Dow is weak and on long-term charts, its major up trendline suggests support in the 17000 area. Major support in the S&P 500 (SPX) comes in starting at 2050, extending to the low-2000 area.
Major support in the Nasdaq Composite (COMP) begins well under current levels, beginning around 4830, extending next to 4550; Friday COMP Close: 5043.
Bullish sentiment fell this past week into the beginnings of what are typically 'oversold' readings, which normally implies that traders may be getting 'too' bearish in their expectations. In this Market it may take prolonged bearishness before my sentiment indicator would suggest potential for a sustained rebound. Stay tuned on that!
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX) DAILY CHART:
The S&P 500 (SPX) chart is mixed in that the trend continues sideways. The prior Closing low has held for now, in the area of a 2/3rds retracement of SPX's July rally. I was confident that the early-July low was a tradable bottom and a good-sized rally followed. The next rally was short lived and I can't pretend to know what upside there is from the Friday Close at 2077. Perhaps back to the 2100-2110 area, which I've highlighted as current resistance.
Near support may have been reached at Friday's 2068 low, but prior chart analysis suggests 2065 as near support, extending to the 2052-2050 area. 2050 as noted in my initial bottom line comments above is a big deal, as a decisive downside penetration of 2050, particularly on a weekly Closing basis, would dip below the low end of SPX's 9-month trading range.
The S&P is not yet back to a 'fully' oversold reading in terms of the 13-day Relative Strength Index (RSI), but my 'sentiment' readings are showing a bearish 'extreme' on a rolling 5-day moving average basis. I have to go back to the important mid-October (2014) low to find as much trader bearishness on a 5-day basis, which in a contrarian sense may suggest a near-term rally. Stay tuned!
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) has the same 'mixed' sideways trending pattern as SPX. The 915 area again offered technical support as it had previously, although the intraday lows carried further given stop-loss selling and follow through bearishness from Thursday's rout. I liked the 915 area as a buy point before but this time wonder how far a rally, if any, from this area might carry this time.
The Market viewed technically is 'working off' the long-term overbought condition resulting from the 2009-2014 monster rally.
I've highlighted near support at 915, extending to the 910 area, with 900 as long-term weekly chart support, although a dip to as low as the 875 area would not pierce OEX's longer-term up trendline (not shown).
Near term resistance is seen at 930, extending to 935. No trading suggestions this week.
THE DOW 30 INDUSTRIAL AVERAGE (INDU); DAILY CHART:
The Dow 30 (INDU) is otherwise these days appropriately called the 'dogs of the Dow'. You have to search hard for INDU components ones that are more or less resisting selling pressures; e.g., CSCO, GS, HD, JPM, NKE, PFE (mostly), UNH, and V. That's 8 bullish patterns of 30, which isn't a lot to write home about, unless these are the only stocks you own currently!
Financial stocks are well represented (JPM + GS) as a quarter of these aforementioned 8 still-bullish. Energy stocks of the Dow, CVX and XOM continue to get hammered, unsurprisingly given the slide in oil prices. It's a tough time to be a monster cap company but the small cap Russell ain't doing so well either!!
INDU can be represented as trading within a downward price channel as seen below. Support is highlighted as 17280, extending to 17200. Major support, based on the weekly chart uptrend channel (not shown) intersects currently in the 17000 area. It could take a further decline to this area to finish with the selling and portfolio weeding out process going on.
Resistance is suggested at 17500, with next resistance in the 17700-17760 area. INDU has fallen back into an 'oversold' RSI reading, at least on my 'default' 13-day setting. That plus a NYC subway token will get you into the downtown A train but may not get us a rally in the lagging sagging Dow 30!
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) is holding up relatively well. While the retreat from the 5150 area did not lead to a new Closing low for the recent downswing, COMP did get a little closer briefly to the milestone 5000 level.
Initial technical support looks like it may again be found in the 5010-5025 zone representing the important 62-66% retracement zone, with next support at 5000, extending to around 4965.
Resistance is highlighted at 5100, extending to 5150-5175. COMP is not back to an oversold RSI extreme, but my (CPRATIO) 'sentiment' indicator is just entering that territory.
I suspect that there will be a further fall in bullishness or conversely, further bearishness among traders, before this Market is ready to mount a sustained rally overall; not just in the tech-heavy COMP and NDX.
NASDAQ 100 (NDX); DAILY CHART:
Old saying about the rising or lowering tide raising or lowering ALL boats applies even to love affair with the big cap Nasdaq 100 (NDX) and all things internet and tech oriented.
NDX took a tumble, but is holding up the best of the major indexes. Note that tech bellwether CSCO, as mentioned above in my discussion of Dow stocks, remains in an uptrend. Evidence of 'relative strength' with the big cap Nas 100 is its 'mere' 50% retracement of its July rebound on a Close-only basis. A retracement of around half or 50% is a fairly typical retracement in stocks that are in uptrends.
A deeper 62-66 percent retracement could carry to technical support highlighted in the 4460 area, with support extending to around 4435. 4400 begins fairly major support, which extends to the July lows at 4344-4350. I doubt that NDX will see 4400 again, not unless NDX tech darlings get hit hard down the road. AAPL pierced key $120 support, but hasn't fallen like a stone either to date.
Overhead resistance is seen at 4550-4570, extending to the 4600 area. A sustained rally above 4600, with support on pullbacks to this level, is needed to suggest potential for another crack at 4700. Stay tuned! This August doesn't look like it's going to buck the seasonal bearish tendency in stocks, unlike last year.
The NASDAQ 100 ETF STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock (QQQ) is of course going to follow the NDX so the outlook for a fast recovery rally is uncertain. Only the support and resistance levels need translating to QQQ.
Initial overhead resistance is at 111-11.4, with a next and pivotal overhang at 113.
Support is noted at 109.4, although immediate support may be found at 110 if the week ahead gets off to a more bullish start. Fairly major support begins at 108, extending to 107.4. 106 is major support.
No trading suggestions. I'd be looking at long positions if 108 was reached but that doesn't seem like an attainable downside target in the coming week. There's that big upside gap that would get 'filled in' at 108. Stay tuned on that!
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) is trending lower within a broad downtrend channel currently. Anticipated support is highlighted at 1200, extending to 1190.
Near resistance is comes in 1240, extending to 1253-1260. RUT is oversold again in terms of the 13-day Relative Strength Index or RSI.
The Russell Index has also again reached my lower 'oversold' envelope line, set at 2.5 percent under the centered 21-day moving average. The last dip to implied 'support' at this lower envelope line resulted in a rally, but it was only for 30 points before RUT got slammed again.
From the 1200 area, upside might be to 1240 again but I'm not excited by the prospects of that bet if it could be realized. If I could buy calls at 1200 and risk to RUT 1185 it isn't a bad risk to reward if 1240 or higher is realized, but it's relatively small ball trading so to speak. Buying RUT puts at the last UPSIDE envelope extreme above 1290 was nicely profitable assuming an exit on this last dip!
GOOD TRADING SUCCESS!