Since our last report, both the S&P 500 and NDX broke channel support, and are now into a MOB support band. This is a critical zone to hold, which, if broken, will lead to a decline to their respective 200-day averages.
The S&P 500, NDX, Mid-Cap (MDY), and Dow Transports are between a tight support and resistance zone. Momentum has started to turn up, but we need to see a close above the indicated resistance areas to say we are clear for a move higher.
The S&P 500 is pulling back towards its rising 50-day average and potentially towards its regression trend channel. We have an ellipse turning point indicator at the lower end of the channel about –1.75% from here.
Price is into trendline resistance off the recent 2-month highs. The risk/reward looks good here to short on a break of 15333 with potential downside to 15180. We are not looking for a significant decline from here. Just a move to the tops of early August.
The pullback in both the S&P 500 and NDX held at their respective 50-day averages and triggered ellipse buy signals. Both indices are now above recent MOB bands where the declines started from, and this is bullish.
The pullback on Thursday undercut both the 200-day avg. and the MOB band as shown on the chart below. On Friday, the index recovered both indicators, and we have follow-through tonight.
Both the S&P 500 and NDX are into an area of resistance accompanied by momentum divergence. This continues to be a place to not get aggressive on the long side.
Amazingly, the S&P 500, NDX, Russell 2000 Mid-Cap (MDY), and the Dow Transports are all into resistance zones with momentum divergence in most cases. This is an important area to look for either a change in trend or a push higher for continued strength.
