Resistance Test Due This Week for S&P as Semiconductors Prime For Breakout

We have the Russell 2000 caught in a long term trading range, and despite registering a gain it hasn't changed the larger picture in favor of either bulls or bears.  The only index at a point of inflection is the S&P.  After breaking below the bearish wedge it now finds itself rallying back to former support turned resistance.  There are flickers of good news; intermediate stochastics returned above the bullish mid-line and Friday's close finished above the 50-day MA.

The Russell 2000 closed with a doji inside Thursday's white candlestick. If this was an overbought market we would be looking at a bearsh harami cross but stochastics are at a mid-level, just like the index itself.

The Nasdaq is at least looking upwards having successfully defended support marked by the July and August swing lows. Technicals are a little mixed with Stochastics and On-Balance-Volume generating 'buy' signals but other technicals are bearish.

The most interesting index is the Semiconductors. It's nicely set up for a breakout this week with technicals mostly bullish.  Only the MACD is negative. Strength in semiconductors should help the Nasdaq.

The S&P is primed for a test this week, but what it does will likely lead to a big say as to what will happen for the rest of the year.  Tech indices are firmly bullish, so we may see some contribution from Tech stocks to the S&P. 

You've now read my opinion, next read Douglas' blog.

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