Another good finish to the week
Markets have effectively cleared the first hurdle of the most recent swing high. Speculative indices - the Nasdaq and Russell 2000 - have also started to outperform the more conservative, S&P.
The S&P is about to edge past declining resistance defined by the March-April highs (4,637), something the Nasdaq has already achieved, but the Russell 2000 has yet to do. When it does it will soon come up against the 50-day MA, then the next real challenge is the 4,300 level, which was resistance at the end of April/beginning of May.
The Nasdaq has some fresh air to play with as it looks to mount a challenge on 13,000 resistance (also from the end of April) and its 50-day MA. We still have the MACD trigger 'buy', but On-Balance-Volume, ADX and Stochastics remain on the bearish side of the fence. However, the relative performance gain over the S&P should attract more buyers.
Markets continue to work through a rally off a bottom, kicked off when breadth metrics were heavily oversold. We may still be looking at a bear rally, but bear rallies can last a while and investors shouldn't be concerned about bear rallies at this stage (given the losses already incurred to get to this point). I still think we have a decent market bottom, but it feels like a minority view...
You've now read my opinion, next read Douglas' blog.
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