Last week’s trading week started with a failure to take out the 3900 resistance level on the S&P 500, and the 11575 resistance level on the Nasdaq 100. By Tuesday, they were rolling over and during the next 4 sessions the indices slipped about 200 points on the S&P 500 and nearly 1000 on the Nasdaq 100. Friday saw a reversal with the indices gaining about 1.4%.

The Friday afternoon rally back was signaled by a strong positive divergence in intraday technicals on advance/declines and up/down volume numbers. Key technical resistance now exits at 3800 and 3900 SPX, and 11,200, 11,400 and 11,700 NDX.

The sharp mid-week pullback was about a 50% Fibonacci retracement for the S&P 500, but the NDX was much steeper, giving back nearly 80% of the prior 1250 point multi-session rally. The markets have an opportunity this week to hold support after this current test and stage a strong C-wave rally back. Early in week we will have to see if the bulls can take control. The jury is still out on that. 

Late last week, Chinese stocks and U.S. stocks, with high exposure to the Chinese market, surged and maintained sizable gains on Friday even as the indices traded down. Aside from the renewed speculation about easing the zero-Covid policy, Chinese stocks were also boosted by reports that U.S. auditors completed their on-site inspection of Chinese-listed companies sooner than expected. 

There were also some big technical moves in the commodities market late in the week. Related stocks and ETFs surged and maintained big moves, even during Friday’s mid-day sharp pullback. WTI crude oil futures settled the day up 5.2% to $92.64/bbl, while copper futures jumped 7.6% to $3.69/lb. Natural Gas rose (6.56%) to $6.72/MMBtu

Gold and silver related stocks and ETF’s also had a strong finish to the week. Perhaps a significant technical move may be beginning in that sector. 

We’ll be monitoring these groups for possible recommendations going forward.

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