Weekend Index View
Last week was a runaway win for the bulls, thanks to the Federal Reserve’s decision to drop interest rates by 50 basis points. Let’s zero-in on the charts and see what the current technical picture of the market tells us:
Dow – Daily
- Volume was higher than exactly a month ago – a good sign
- After a large volatility move, we expect consolidation (which we are seeing)
- It “feels like” there should be a pullback and retest of the breakout zone, or at least the moving averages
- Price found resistance just below Dow 13,900, and the index is about 180 points away from another lifetime high
- The only zone of resistance is the ‘all-time highs’ at 14,000.
- There are various zones of support below
- We can now classify the Dow Daily chart as being in a confirmed uptrend again, after breaking above the 13,500 swing high.
- Price is technically overextended beyond the Bollinger Bands – 90% chance of pulling back inside of them in the short-term
Nasdaq:
- Price is also in a confirmed uptrend
- Price broke above a significant trendline that has served as both support and resistance
- Price is also at the upper boundary of the Bollinger Band – great chance of a retest downwards
- Volume increased relative to the recent 20 trading days
- The moving averages are now in a confirmed bullish orientation/pattern
- Price sits 50 points away from a 7-year high
The Russell 2000:
- Price broke above significant resistance from an established trendline.
- Price broke above the flattening 200 period moving average – a major technical boundary
- Price also is at the upper range of the Bollinger Band
- Price “feels like” it will stay above the break and possibly retest the previous trendline at 840
- A momentum divergence resolved nicely to the upside
Bonus Chart Google (GOOG):
I wanted to show the immense strength Google has shown over the past week. Five days in a row took price from $525 to $560 without a pause.
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