Sharp Move Off Key Technical Support

Last week’s sharp reversal higher came right where it technically really needed to on Thursday. The move off pullback lows near S&P 500 at 3928 and Nasdaq 100 at 11830 came off key support and popped through four-week falling wedges with a thrust that took out their 10-, 21- and 50-day moving averages as well! Last week also saw technical confirmation for the rally back with new high/lows ratio about 3 to 1 positive with strong up/down volume as well.

Friday saw the strongest performance as the S&P 500 closed up +1.61%, the Dow Jones Industrials Index closed up +1.17%, and the Nasdaq 100 Index closed up +2.04%. 

A decline in bond yields on Friday supported a rally in technology stocks as the 10-year T-note yield fell 9 basic points to 3.965%. Bond yields fell back on carryover support from Thursday when Atlanta Fed, President Bostic, said the Fed could be in a position to pause rate hikes by mid to late summer. 

Market sentiment also improved as strength in China’s economy sparked a rally in the Shanghai Composite to a 7 1/2 month high on Friday that provided carryover support to world equity markets. 

Weekly group strength was lead by the materials sector + more than 4%. Other leading groups were Communications Services +3.3%, Industrials +3.2%, Energy and Information Technology Groups, both +2.9%. 

Sharp moves off key technical support, such as we just experienced historically, often lead to strong follow-through moves, and I fully expect that we should see that this coming week. However, this market has been quite volatile and much harder than usual to analyze due to many exterior influences, such as FOMC comments and actions. It will require flexibility and continual re-evaluation of technicals going forward. 

I will certainly be keeping members appraised of any important changes as they occur!

Remember: “Trade what you see NOT what you think.”

Harry Boxer
President & Founder,

“Trade what you see, not what you think.”


Veteran Stock Trader, Analyst, Coach & Author

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