Sunday, January 02, 2011

Weekly Market Commentary: New Year Rolls In

The New Year brings new challenges as the Santa Rally comes into a new quarter and a new year.

Starting with the Nasdaq we have overbought stochastics on a bearish divergence in the MACD histogram. The index is caught between 2,535 support and 2,818 resistance and the early assumption is a continuation of the rally up to 2,818.

Nasdaq

via StockCharts.com

The Nasdaq 100 is in the thin air of multi-year highs (although on the daily timeframe it has already drifted out of its rising channel). While 2,217 is a support level I would look to a test of 2,130 as the first meaningful challenge for bulls.

($NDX)

via StockCharts.com

The Nasdaq Summation Index is back against resistance with stochastics popping into overbought territory.

($NASI)

via StockCharts.com

Small Caps have been dull; 760 support key but this is an index which has failed to challenge 2007 highs, unlike Tech.

($RUT)

via StockCharts.com

The S&P also has its work cut out having only just cleared 2010 highs (a long way from 2008 or 2007 highs). Stochastics overbought with bearish divergence in MACD histogram.

($SPX)

via StockCharts.com

So for the first few weeks the rally could run a little higher, but when the selling starts it's likely to be short and sharp down - November lows will be the first major test.

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