Can Overhead Resistance Be Taken Out?
Last week the indices initially failed to get a strong enough follow through to the prior week’s rally and suffered a strong pullback retest. However, they managed to hold initial KEY technical price and moving average support on Thursday and surged back nearly 2% on Friday, finishing mixed with a small gain for the week on the Nasdaq 100 and just a small loss for the S&P 500.
All eleven S&P 500 sectors closed with a gain on Friday. Communication services (+4.0%) led by a wide margin thanks to Netflix and Alphabet. Other top performers on Friday were the information technology (+2.7%) and consumer discretionary (+2.5%) sectors, reflecting renewed interest in the mega cap space.
By the close on Friday, advancers led decliners by a 4-to-1 margin at the NYSE and a nearly 3-to-1 margin at the Nasdaq. The strong surge back left both the S& P 500 & Nasdaq 100 just below their 1-year declining channel tops resistance lines. As a result, next week may be a critical one as the indices need to prove themselves with a breakout thrust to possibly complete important bottoming patterns and extend the rallies off their early month lows.
Key and leading sector ETFs such as SMH (Semiconductor), FAS (Financial) and XBI/LABU (Biotech) have developed BULLISH basing formations that could lead to important rallies in the next few weeks, if overhead resistance not too far away can be taken out.
That certainly remains to be seen, but nevertheless encouraging. Of course, we’ll keep you posted going forward at thetechtrader.com.
Remember: “Trade what you see NOT what you think.”
President & Founder, TheTechTrader.com
“Trade what you see, not what you think.”