David Chojnacki S1F Market Technician
After moving up at the open, the Market tried to sell off, however, buyers stepped in to continue the reversal started earlier in the week. At the close on Friday, the DJIA was up 23.6 points, the S&P gained just 3.3 points, and the Nasdaq100 added 16 points. Breadth was positive, 2 to 1, on below average volume. For the week, the S&P gained 1.8%, the DJIA adding 1.5%, and the Nasdaq100 a healthy gain of 2.4%. The volume on the week's upside move was a little weak, leaving some suspicion as to the conviction of the reversal. Near term technicals have improved, with RSI's moving back into the upper 50's, and ROC(10's) are positive and strengthening. We have seen the 20D-SMA's turn to the downside. As the indices reversed to the upside, they have moved through the short term moving averages increasing the short term technical strength. MACD's for the DJIA and S&P, have moved back above signal, with the Nasdaq100 rising but still lagging below. We broke through the recent sideways trade, indicating that we want to go back and test the early April highs. This week's reversal may be the beginning of the fifth wave motive move. Should we break through the April highs, we see some resistance near 1440, but a target of 1475 for the S&P. The Nasdaq100, which has been the leader since the 2009 bottom, may test the 2925 level.
David Chojnacki S1F Market Technician
Long term, upside bias remains intact for all three major indices. Short term, technicals reversed this week, moving the bias to the upside. Technicals improved dramatically, however, volume did not confirm the conviction to the upside. After breaking out of the recent sideways trade, indications are that we are beginning a fifth motive wave in the rally which began in Oct.11. Near term we should see the strength of last week continuing, with daily reactions to earnings and economic news this week. We have the Employment Report at the end of the week, which will be key. Early Futures are slightly lower versus fair value, indicating some weakness at the open.
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