We knew the intermediate-term support line (dashed) was an important line for the
Nasdaq, but to what degree wasn?t evident until Tuesday, when we touched it and
bounced back above our key 10 and 20 day exponential moving average lines. Closing
above the 10 and 20 day EMAs now forces us to be bullish again, at least for the near
term. But it?s not just these important EMA lines that are indicating strength; the
MACD and Chaikin lines are also giving short-term buy signals.
Our concern over the MACD lines was a cross under the zero level, which would have
served as a confirming bearish signal. Some buying late last week, though, nipped
that concern a few days before it became a reality, as the MACD chart is very near a
bullish crossover again (see chart). As always, we like to see any major reversal
such as this to be made on higher volume, which it was. The Chaikin oscillator?s
cross back above the zero level indicates that the heavier volume is on the buy side,
rather than the sell side.
For the Nasdaq Composite, the number to watch is 1685. This became even more clear
last week, as our high was 1683.77, immediately prior to Friday?s reversal. We
haven?t been able to stay above 1685 the last four times we?ve hit it in as many
weeks, so we?ll set that as our next resistance level. Based on current momentum
though, we?re planning on at least a retest of the 1685 level, if not higher. We
could go as high as 1750 without any major problems. We?ll use these as our
resistance levels.
Support is at 1615, or the lower trend line. This support level will rise each day,
so be sure to adjust accordingly.
Daily Chart of the Nasdaq Composite (COMPX)
S&P 500 Commentary
Our outlook for the broader S&P 500 is the same as that of the Nasdaq - bullish over
the next few days, but bearish out past that. As the chart shows, we?re still inside
generally bearish trend lines, and still recovering from Tuesday?s sell-off. We also
managed to stay above both e the 10 and 20 day EMAs, and we?ll be bullish as long as
we do.
But like the Nasdaq, we don?t see this current buying spree lasting too long. There
are a couple of reasons for this, but the more important one is our DMI/ADX chart. We
got a bullish cross of the DMI+ line over the DMI- line, which is technically a buy
signal. That buy signal, however, is tainted by the fact that the low and falling ADX
line (gray) means that the bull trend is relatively weak.
The other reason we?re not planning on prolonged bullishness is seen in the
accumulation-distribution line. The line has started to rise again over the last
three sessions, yet is still under the regression (average) line. We?re expecting
enough buying over the coming days to push the line back to the regression line, but
further out than that we?re not so bullish. Once we re-establish the support line for
the accumulation-distribution indicator, we?ll await for the break under it as our
intermediate-term sell signal.
Support is at 965, with resistance at 1015 and 1040.
S&P 500 Chart - Daily
The Bottom Line
The coming week is fairly slow in terms of economic news, so any trading volatility
is going to come from the continuation or reversal of last week's trend. As we
stated, our expectation is a few more days of upside stemming from momentum and
earnings announcements, then substantial declines for the intermediate term. It would
pay to be aware of early earnings announcements, as most companies that report later
typically do about as well as those that report early. The key things to keep any eye
on from here are the support and resistance levels.
Have a Great Trading Week Ahead!
Price Headley, CFA, President
With, James Brumley, Research Analyst
Se não receio o erro é porque estou sempre pronto a corrigi-lo
There's no bull side and no bear side. JUST THE RIGHT SIDE!
#forex4u - chat forex MIRC
O Clubeinvest.com informa que nenhuma da informação
aqui facultada deverá ser entendida como conselho ou recomendação
de qualquer tipo de transacção ou investimento.
