The Morning Cup of Jo
One more Hoof ! You can do it ! - PUUUSHHHH !!!
Going into a holiday weekend is always particularly slow for the markets and this last one was no exception. Even for a holiday the volume, for the most part, was still very lackluster. Hence, my belief is the strength of this bounce doesn't have the conviction of a true turnaround rally - a rally that changes the sentiment and current trend of the market. Only time can tell in proving me wrong. For now, what we need to be technically focused on is the downtrend set in place since the beginning of the year. If this is broken, with substantial volume, we can have more faith in the occurring trend and its continuation.
The Nasdaq is in the midst of a large Descending Triangle and will be butting heads with the ST downtrend very shortly. If it does break through there is additional resistance at 2100 it has to contend with. Breaking 2100 would pop the index through the neckline of a double bottom pattern and give plenty of confirmation for Hoofy to be long this tech-laden index. Until then, it's still in a confirmed downtrend and countertrend rally.
The SPX is a bit more simplistic. It's trading in a downward sloping channel with plenty of room until it reaches the upward end of its range. Once again, I'm not seeing any conviction in accumulation volume. However, if the SPX can break the ST downtrend and bust through 1,150, this would complete a double bottom pattern and put Boo back into hibernation for a while.
The Dow is in the same scenario as the SPX with the downward sloping channel. 10,400 is the next key level to watch. After that it's 10,570, which breaks the crest of the "W" in a double bottom pattern.
Now that Hoofy's gotten out of bed, it's time to see if he can finish the game. I believe over the next week or two things are gonna get somewhat dicey, just like when the SPX was pushin' down on its 200-DMA. Expect the same type of action on the topside. If these levels are penetrated, watch for volume. This will be the key that unlocks the door. Weak volume may produce weak results, similar to the attempted breakout on February 11th. In other words, careful where you walk; you don't have to run out the door as soon as it opens. If this is truly the next leg of the up-trend and that was just an ST consolidation, there will be a plethora of opportunities to take advantage of over the coming months.
I hope this helped.
Until next time...
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