Technical Damage to the Indexes

May 15, 2007: 7:50 PM CST

The Russell 2000 suffered the worst technical damage today (in terms of support/resistance), while the Nasdaq isn’t far behind. The S&P and Dow are still looking comfortable, yet a test of the rising 20 period moving average isn’t far away.

For the Nasdaq, a test of the 50 MA would mean shedding 25 more points (keep in mind we lost 21 points today).

The Russell (and Nasdaq) have violated the 20 period moving average and now rests at the stabilizing 50 period MA. This area could find support, but if not, odds favor continuation to the downside.

S&P (Strongest of the indexes, along with the Dow)

spx-may-15.png

The Nasdaq, which could test the 50 soon (shedding 25 points):

nasdaq-may-15.png

The Russell (small-cap) which has languished the other indexes:

russell-may-15.png

We are seeing momentum divergences (with price – declining momentum) in all the indexes, which is a caution sign.

Keep this in mind when you’re putting on swing trades this week. Most major indexes stand at critical junctures, or what I call “technical decision nodes.”

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