Last week’s winner was the equal-weighted S&P 500 as it marked a clear breakout, but the index came back to breakout support (and stayed there) by Friday’s close. The better news is the last two days have seen two doji/hammers with rebound support off the 20-day MA. Technicals have dropped out of a net bullish state with a MACD trigger ’sell’. It’s a buying opportunity with a stop at Friday’s low.
The Russell 2000 () is trading around its 50-day MA in what looks to be decent support. If there is a little red flag, it’s that since the peak at $302, it has eased back on heavier distribution days with On-Balance-Volume trending down.
This suggests the 50-day MA won’t hold as support, and there is a large chunk of space between the 50-day and 200-day MA. We have stochastics near the mid-line, which should be a rally point, but failing that, there is room to go before momentum becomes oversold.
The S&P 500 has rallied back from a ’bear flag’ to take the index above its 20-day and 50-day MAs. Technicals remain mixed – mostly bearish – but there is a new ’buy’ trigger in On-Balance-Volume. The broader reality is that this index has been range-bound since May, and a gain or loss on Monday is unlikely to change that.
The might be the best long trade on offer. It finished last week on a ’bear trap’ with a decent opportunity for a move back to 27K. Friday’s doji marked indecision just below its 20-day MA, but 25K is a natural support level to measure risk:reward off. Technicals are net bearish and have moved out of an oversold state.
has stayed at its *200-week MA* and after coming back from 125K last year, it’s now time to see buyers make a larger move higher. Technicals are mostly bearish bar a weak ’buy’ in the MACD (on the weekly time frame).
have been the story of the week but one only has to look at the monthly chart to see how much it can fall and still be considered bullish. The first bullish fib retracement doesn’t kick in until sub-10K, and we are still a long way from that.
Keep an eye on the relationship between and . When this relationship heads south, it’s typically bad news for markets, but we can see in 2011 that a comparable scenario eventually brought with it a multi-year rally. I have drawn in a support line for this relationship. I’m looking for a break of this line, a negative impact on markets, before offering a strong, long-term buying opportunity.
For the coming week, we want to see early bullish action to confirm support, with those indices already at support offering a direct buying opportunity.