Charting the Markets: S&P 500 Gets a Much-Needed Jolt
Bouncing off the lower end of the channel was crucial if this uptrend were to continue.
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The first full week of trading in about a month showed us plenty of action, mostly to the upside. All of the indexes had very strong weeks, with the Russell 2000 and Dow Industrials higher by more than 3.8%, putting them both in positive territory for this very early part of the year. The S&P 500, for its part, had a very steady week and moved higher, though it appeared at times the good support would break.
The MACD (movinmg average convergence/divergence) still remains bearish but is improving, while the stochastics were bothersome last week but seem to be making a nice turn upward. Some more positive momentum would go a long way, though money flow is still in the bullish camp.
What would give us some comfort for the uptrend to continue would be a higher high, higher low in the chart. That sort of confidence is what we need to see for a move back to the higher end of the channel, which would be nearly 6250 on the index. That's certainly achievable, in our view.
Markets are closed Monday, January 20, in observance of MLK Day, and bullish seasonal trends have flipped to bearish. All that said, breadth and volume have been positive, and these indicators are supporting stocks for another run at new highs. Let's see if earnings are taken positively this time around.
