THE BOTTOM LINE:
Some facets of the S&P and Nasdaq dailyindex charts suggest those indices are at or near technical resistance. In a larger longer-term chart perspective, upside potential remains considerable.
There's potential near resistance implied by the top end of the uptrend channels highlighted on my daily charts. Quite a different or broader perspective is obtained by looking at the broad weekly chart uptrend channels in SPX, OEX, COMP and NDX that will follow the shorter-term daily charts this week.
There's considerable upside potential suggested by how high the major indexes would get before hitting the upper end of weekly chart channels. Hitting the upper end of such broad channels often is at the near the end point for that up leg; or, at least marks the point where the prior very strong upside momentum slows way down.
This market is at high risk for a shakeout but it would take significant bearish news to slow the money going into equities. Right now stocks are the most attractive current place to put money to work that's also quite liquid.
I'll be starting to comment on any noteworthy changes or projections related to the 9 component sectors of the S&P 500 represented by the SPDR Exchange Traded Fund (ETF) stocks seen below, going from the 2-year highest return ETF to lowest:
1.) Health Care Select Sector; SPDR: XLV: - e.g., JNJ, PFE, MRK
2.) Consumer Discretionary Select Sector; SPDR: XLY - e.g., DIS, MCD, AMZN
3.) Consumer Staples Select Sector; SPDR: XLP - e.g., PG, WMT, CVS
4.) Utilities Select Sector; SPDR: XLU - e.g., DUK, SO, D
5.) Financial Select Sector; SPDR: XLF - e.g., JPM, WFC, BAC, C;
6.) Technology Select Sector; SPDR: XLK: - e.g., AAPL, MSFT, GOOG;
7.) Industrial Select Sector; SPDR: XLI - e.g., GE, UTX, MMM;
8.) Energy Select Sector; SPDR: XLE -e.g., XOM, CVX, SLB
9.) Materials Select Sector; SPDR: XLF - e.g., DD, DOW, FCX;
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The S&P 500 (SPX) continues to maintain a strong bullish pattern, but potential technical resistances would appear to come in at the top end of the daily chart uptrend channel at 1640 and extending over time to 1660 and higher.
Near support is in the 1600 area, extending to 1580-1570. SPX continues to hover just under the upper overbought 'extreme' line of the Relative Strength Index (RSI). These kind of high RSI readings have often gone on for extended periods in strong bull markets like this one. I can also say that market 'timing' on just an arbitrary crossing of a line, is mostly a losing proposition. These high RSI readings do provide a long period of the yellow light of 'caution'.
Of the S&P sector tracking stocks this past week we saw neutral to bullish performance except for XLU, the Utilities ETF which had a sharp pullback and possibly the start of a further deeper slide.
The weekly chart is seen after first chart below and the weekly chart pattern suggests considerable more upside possibilities.
S&P 500 (SPX); WEEKLY CHART:
The weekly chart uptrend channel is seen next and the reason I include here, where I don't usually, shows visually in a strong way, how much further upside potential SPX has before hitting the upper ('resistance') end of its broad uptrend channel at 1750.
SPX has gotten well into its long-term 'overbought' zone and the 13-week RSI is headed back up again showing renewed upside momentum. Corrections are to be expected but any tradable top can be far off still in terms of price and time.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) is in the same very strong bullish pattern as the broader 500 Index. OEX also has the same suggestion of an approach to resistance in that it has hit potential resistance implied by the upper end of a well-defined uptrend channel as seen with the OEX daily chart below.
Resistance/selling pressure may develop 736-740 at the upper trendline. If so, this could either start a pullback or simply be a 'pivot point' so to speak where the rally slows down; prices are still going up, just not as fast. Quite often the previous steep run up RATE isn't sustained but a slower advance continues. Important to know that an advance is at risk of slowing when holding index calls in an unhedged bullish position.
Support comes in at 720-715, extending to the lower trendline at 706. Resistance above 736-740, at the upper end of the price channel, is at 750. OEX could get to 770 and just begin touching resistance implied by its weekly chart uptrend channel line.
S&P 100 (OEX) INDEX; WEEKLY CHART
As noted already regarding MAJOR resistance, it begins from a chart perspective, at 770 currently or the top end of the broad weekly chart uptrend channel highlighted below. 700 shows up as important support, the maintaining of which, is key to keeping an UP intermediate trend.
The 13-week Relative Strength Index (RSI) has been hitting the high 'overbought' zone. I don't predict a tradable top based on high 'overbought' RSI levels unless there is a chart 'confirmation' by a bearish downside reversal, hitting a prior high, reversal at a resistance trendline, etc.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU) chart continues in a strongly bullish pattern and has continued working higher within the band of its two uptrend channel lines. Unlike the two S&P indices, the upper end of INDU's uptrend channel comes in well above the Dow's most recent close; at 15330 extending to 15400 (and higher) over time.
Without any lines of apparent resistance, chart wise there's no bearish even near-term case for a pullback or rally slowdown. Not to say that a sharp 'overbought' correction won't start from out of the blue but I don't see major resistance/selling interest coming in until the Average gets to the 16000 area.
Two resistance points are assumed at the upper channel line; first at 15330 and extending over the coming week to 15400. The strongly bullish Dow stocks are still looking quite robust.
Near support is assumed at what was key prior resistance in the 14850 area, with support then extending to 14800.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) chart remains strongly bullish now with two weeks of sizable gains. COMP has broken out above resistance implied by the upper end of the prior multimonth uptrend channel and a broader channel line suggests possible, with a question mark, next technical 'resistance' coming in around 3470 in the near-term. On a weekly chart basis, as highlighted on the chart following the daily COMP chart, there's no projected resistance at the upper channel line before 3800.
I wrote last week that I didn't think COMP would jump one bullish track and have an accelerating advance but it did. I would say WRONG! on that point. I didn't project price targets last time to beyond 3400 unless working with the weekly chart, where 3600 could easily be a reasonable objective.
I anticipate support at the low end of COMP's upside price gap, in the 3350 area, but highlighted support on my first COMP chart is at 3300 at the 21-day moving average, with a next key support at the up trendline, currently intersecting just over 3200.
The 13-day RSI remains quite high as it has climbed to a level where COMP has tended to at least level off in prior rallies; or, has worked lower.
NASDAQ COMPOSITE (COMP) INDEX; WEEKLY CHART:
Important on a weekly chart basis is the well-defined broad uptrend price channel that has been traced out with the Nasdaq Composite (COMP) multiyear advance dating from early-2009. In terms of another move up to or toward the upper channel line (and implied resistance), such an intersection would come into play at 3800 or higher.
COMP is knocking at the door of the 'overbought' RSI zone on a 13-week basis but isn't yet there. Moreover, in strong bull markets overbought conditions can go on for lengthily periods before there's a sizable retracement.
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) chart showed strong upside bullish acceleration after the overnight upside price gap of the week before last; a gap that would be 'filled in' at 2915, an area expected to offer technical support on a pullback.
As with the Composite chart, the NDX daily chart's uptrend price channel of recent months suggests potential resistance just overhead, at 3000. 3000 can be anticipated to be a pivotal point (as resistance or 'signaling' an upside breakout) just because of its being an even round 1000 increment.
The 13-day RSI has gotten as high as it has in months, which is how momentum indicators work, since this recent rally ran 200+ points in a short time span.
NASDAQ 100 (NDX); WEEKLY CHART:
The weekly NDX chart, with its much larger time frame and expanded uptrend channel, suggests only minor resistance around 3000 and no projected technical resistance seen before 3270, at the current top end of NDX's broad weekly uptrend channel.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 (QQQ) tracking stock is in the same accelerated uptrend as the underlying NDX. With the index (ETF) stock I'm no longer projecting an upper end of QQQ's uptrend channel as implying immediate overhead resistance beyond 73.2; a next objective and possible resistance computed by other means comes in at 75-75.3.
In terms of the weekly chart (not shown), the upper resistance end of that broad uptrend channel comes in well above current levels; i.e., at 80.3 currently.
Near technical/chart support is at the low end of QQQ's recent upside gap at 71.4; my first highlighted green support arrow comes in at 70.3, with pivotal support at the lower trendline, currently intersecting at 68.7.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) Index was last week in the approximate mid-point of its broad bullish uptrend channel. I figured, on a risk to reward basis, further upside potential was approximately equal to the downside possibilities on a next price swing. The intermediate trend was more or less 'confirmed' as UP when RUT crossed above its prior line of resistance at 953, which is noted as support by the highlighted green up arrow.
If in bullish strategies from lower levels, there was every reason to maintain positions. At 1000 it's another story. There's potential near resistance at 980, with more pivotal resistance coming to play in the 1000 area. 1006 is where RUT's upper trendline intersects currently, implying possible trendline resistance.
The Russell 2000 should have support at 940, then strong trendline support in the 920 area. 900 is an important support. A Close below 900, not reversed within a day, calls the intermediate UP trend into question but the trend only reverses to DOWN if 900 is penetrated as the last key downswing low.
GOOD TRADING SUCCESS!