I really feel just like the short-term danger is popping as soon as once more and I am going to clarify why in my evaluation under. Please do not misunderstand. I instructed a backside was in place a number of weeks in the past and I LOVE what has been occurring when it comes to manipulation/accumulation and I LOVE the truth that we had been in a position to shortly regain each the 20-day EMA and 50-day SMA on our main indices.
Nevertheless, listed here are the 4 main indices and the place they’re at at present on their respective charts and their subsequent key overhead resistance ranges:
Dow Jones
We did handle to shut simply above the 50-day SMA right here, however the Dow Jones nonetheless seems susceptible to me. Given the truth that the S&P 500 has room to run up to what’s now main worth resistance at 5782, I may see the Dow Jones shifting a bit larger to problem the late-March excessive at roughly 42750. That might function a neckline.
S&P 500
20-day EMA resistance? No drawback, went proper via. Hole resistance 5500? Ditto. 50-day SMA resistance. Ditto. This rally has been spectacular. Key ranges of worth resistance have failed and this tells me that we’re not going to violate the low at 4835. It is set in stone, for my part. There are nonetheless a few key resistance ranges on the S&P 500 that we’ll should cope with subsequent week. The primary would be the early-April rebound try that failed close to 5700. Immediately’s intraday excessive was 5700. The subsequent one, nonetheless, would be the largest on the chart and that is the place we final failed in late March – at 5782.
NASDAQ 100:
Appears to be like just like the S&P 500, however I did add the RSI to this chart. Throughout downtrends, RSI 60 tends to be somewhat massive resistance. We see many rallies fail at or close to that degree. The NDX simply crossed RSI 60….barely. At our Friday intraday excessive, the NASDAQ 100 pulled inside 100 factors (lower than 0.5%) of the late-March excessive close to 20250. I do not know if we flip right here or not, however I do know the dangers are elevated.
Russell 2000:
The 197 degree supplied nice worth help on a number of events, so after we see a heavy-volume breakdown like we noticed in early April, we must always acknowledge how necessary it’s to clear that very same worth resistance on the best way again up. We did so on Friday with gusto. I completely LOVE the sudden accumulation that is taken place within the IWM. I consider that may lead to a a lot bigger transfer in some unspecified time in the future later this 12 months. However are we due for one more spherical of promoting first, maybe at upcoming worth resistance ranges marked above? We’ll quickly discover out.
Watch out forward, particularly if a rising-volume, reversing candle prints on our main indices someday subsequent week.
Sentiment
Take a look at this 5-day SMA of the fairness solely put name ratio ($CPCE):
We simply hit 0.55, displaying essentially the most complacency we have seen prior to now 5 weeks or so. Excessive low readings have beforehand marked corrections and/or cyclical bear markets and that was one key topping indicator that I mentioned again in January/February. Different prior strikes right down to 0.55 have additionally resulted in short-term tops. I believed the present .55 studying was price stating for that reason.
Seasonality may additionally play a job. Early Could (via the fifth) tends to supply historic tailwinds, however the center a part of Could (sixth via twenty fifth) has a historical past of being somewhat difficult. The fifth is Monday, so given every thing I’ve mentioned above and realizing that our bullish seasonal window may quickly be closing, look ahead to a possible reversing candle as an indication to consider lowering danger (lined calls, S&P 500 places for insurance coverage, shifting to money, and so on.).
I am not able to definitively name a short-term high right here, however I do need to level out that the SHORT-TERM dangers of being lengthy proper now are rising. Do with that what you could.
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Comfortable buying and selling!
Tom
Tom Bowley is the Chief Market Strategist of EarningsBeats.com, an organization offering a analysis and academic platform for each funding professionals and particular person buyers. Tom writes a complete Every day Market Report (DMR), offering steerage to EB.com members day-after-day that the inventory market is open. Tom has contributed technical experience right here at StockCharts.com since 2006 and has a basic background in public accounting as nicely, mixing a singular ability set to strategy the U.S. inventory market.
