Oversold bounce off support.
We said short term breadth was oversold for the bulls to at the very least attempt a bounce if they still were in the game.
So we have a bounce.
This is a weekly
The move today got the index to resistance of 1200 area and just above the 200 MA.
In two days, Index has done a sharp test of support around 1175 and a turn to immediate resistance half way up the 1175-1225 band.
This is a daily
We can clearly see that index managed to hold support yesterday. Some short term MAs are contracting into a narrow sideways formation. Notice that they coincide with 1175-1200. Which is the lower half of the 1175-1225 band. Bulls need to take 1200 and keep pullbacks above 1175. Bears need to break below 1175 and keep bounces below 1200. It’s as simple as that for now.
Daily volume was well below average (It is Turkey Week USA). Daily breadth was awesome.
Notice the new peak on the net new high gauge. On November 16, I said:
“Notice the net number of net new highs that has crept below zero. Last two occasions this happened, we had bottoms. Last 4 occasions it happened, we had bounces.”
So far so good
The volume was absent today, but volume has not been a major driver of any S&P run since March 2009. Breadth has led the index time and time again, so, if breadth does well, I take notice.
Breadth was excellent, so it’s no surprise that McClellan rose back up
Bulls need to do more than just running to resistance on a day before Turkey Holiday USA. They need to break above 1200 as we mentioned. They also need to bid persistently and turn the gauges of this chart back up
NDX has been a clear leader in this mid-term uptrend.
NDX had a very good day. It outperformed S&P and cleared the resistance of its short term moving averages. Notice how the mid line of the blue channel and the 34 EMA offered support in the recent down days.
It’s important for NDX to stay above the recently tested support.
NDX’s McClellan rose also
Notice that NDX’s Summation has not did not dip negative during the recent weakness, positively diverging from S&P’s Summation. That is a sign of internal strength.
Notice that on both indexes McClellan volume is lagging McClellan price. It’s OK, volume has not been a leading factor. But for it to stay OK, price breadth should keep expanding and volume breadth should catch up if we are going to have a resumption of the uptrend.
I don’t think there is any doubt that USD is a main piece, maybe the centre piece, of the market performance.
USD has a sharp bounce from support and is now testing resistance. Keep an eye on how it behaves around here, between 78 and 81
This is a 60-min chart
Market has been gapping up and down a narrow range these past few days. Still the pre-market activity that causes these gaps has not been strong enough to break the market one way or the other.
It’s very hard to count or play or predict the minutiae of intraday moves of a choppy market. But stepping back and looking at weekly and daily charts, we see it’s all part of an ongoing grind in the 1175-1200-1225 range. I have laid down a red channel and marked an area with read arrows. That is an area that I think bulls should overcome and hold.
It’s important for both S&P and NDX to expand McClellan and McClellan volume
OEW pivot support at 1187 and 1176. Pivot resistance at 1222 and 1240.
Long term trend is up. Mid-term trend is up. Short term trend is chop-chop (we have a higher low and that's about it for now).
Have a Nice Day!
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