A snapshot of the main indexes using daily charts.
SPX has thus far been resisted at the extreme target of 2815. It is now rolling over to test minor support at the SMA 200 (2750). A failure there would load the 2650 area as the next downside target. A hold of 2750 and new bounce could put SPX back on the Top-Test Express.
MACD as previously noted, sucks frankly. RSI is also becoming unsavory.
Dow is very similar in most respects, although like SPX above it is still holding its EMA 20 but unlike SPX it is well above the SMA 200. A continued decline would set the Dow about a test of the SMA 200 and/or SMA 50, which is rising to eventually meet the SMA 200. Call 25,000 the 1st support area but also note a gap in the area of the SMA 50 (24,675).
NDX is hesitating from the same type of resistance as the above but has not turned down. It’s got that ugly MACD thing going on though. If a pullback ensues watch for 6800 as the 1st key support area (S/T lateral shelf & the SMA 50).
SOX got heavy yesterday and is turning down by MACD & RSI. Initial support is 1280 down to 1260, which the SMA 50 is rising to. There is lateral support in that general area.
RUT got cracked hard after a failure at the SMA 200. Best short-term support is around 1480, which has some lateral stuff and the SMA 50.
Bottom Line
The little pullback in play now is logical since it came from overbought areas that were also extreme upside resistance targets. It also comes from a poor contrarian sentiment setup. If it continues we note logical moderate pullback areas above. If not, it’s the Top-Test Express, or…
Now for additional perspective, let’s take a look at weekly SPX using a chart created a few weeks ago to note a potential new downtrend channel. This chart holds the potential for a break above 2815 but then a bull trap if the still hypothetical top trend line has a say in the matter.
What the bulls like is that the weekly EMA 20 & 50 have crossed back up, negating a bear signal. What the bears imagine they like is that theoretical downtrend channel. The chart shows the original target zone, which I’d imagine this relief rally – well worth its salt – has made many people take off their radar. It is still on my radar until/unless SPX takes out 2850.
