Pillars of Market Technical Support and Small Cap MACD Buy
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The market's early March consolidation phase has brought down the excessive bullish sentiment levels we were at back at the new highs on March 1. The chatter of 10% corrections, bear markets and 2000-3000-point DJIA drops has picked up in the last week or so. However, support has held and the Small Caps have even put in a MACD Buy signal, suggesting the Small Cap rally may still have legs.
I have updated the charts from 11-days ago when we warned that the small cap rally was nearing the end. Russell 2000 held right at the 1355 support we highlighted. I have also switched to the faster 8-17-9 MACD Buy indicator instead of the slower 12-26-9 MACD Sell indicator to illustrate the renewed short term strength in the small cap Russell 2000 indicator. But first let's take a quick look at the S&P 500's technical picture.
I added the third higher level of support at S&P 2355 at the end-of-February consolidation period that it held last week as illustrated with the light green oval and green arrow in the upper chart pane. However in the lower panes the S&P is still struggling technically to show momentum in the stochastics, relative strength and MACD.
The Russell 2000 on the other hand is showing more momentum and strength since bouncing of the aforementioned 1355 support level last week as illustrated with the light green oval and green arrow in the upper chart pane. In the lower panes you can see the change in momentum to the upside in stochastics and RSI as well as the positive MACD Buy indicator crossover and histogram in the bottom pane.
Both indices and the market as a whole still have some work to do technically, but if these support levels hold and the charts and indicators remain constructive further upside is expected, barring any exogenous events out of Washington DC or elsewhere.
- GSPC false
- RUT false
- SPY 236.77 -0.26
- IWM 137.75 -0.71
- QQQ 131.81 +0.12
- DIA 208.81 -0.05
- technical analysis
This article was written by Jeff Hirsch for Almanac Trader on Mar 20, 2017.
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