Quiet Week for Equities

Equity markets closed marginally lower last week on less than average volume.

This follows two straight weeks of advances, and a nearly 80 point rally on the S&P 500.

For now though, we continue to trade below key resistance near the mid-February peak.

As I mentioned in the prior weekly update, this is the key resistance area we want to watch over the intermediate-term. If the bulls manage to clear this level, there is a good chance we see even higher stock prices.

Until a clear breakout however, we will remain patient, and trade cautiously. There is a strong possibility that the bullish intermediate-term uptrend is still consolidating after recent gains. (Image: tylerdurden on Flickr)

Looking at the short-term S&P 500 chart, we can clearly see that there was no real winner last week. Although the benchmark index closed slightly lower, most of the trading activity occurred within a fairly narrow range.

Over the short-term, keep an eye on critical psychological support near 1295-1300 (S&P 500), this is a key area to watch. A downside breakout through this level would be a clear intermediate-term warning sign for the bulls.

Also, last week's high near 1340 is still a short-term resistance level to keep an eye on.

 

 

Turning to the daily outlook, not much has changed since the prior update, and we are still trading within a short-term range.

I have highlighted this potential consolidation area on the following S&P 500 chart. A breakout from this range (red line resistance) would confirm a new bull market high, and further upside from that point would be likely.

 

 

"This is a long-term update, and we focus on the big picture. Is there any reason to think that this multi-year bull market is over? At this point, unlikely. Until we see the confirmation of a major intermediate-term lower low, or lower high, the long-term bull market remains in play. What are some of the key support levels that we would need to see taken out here? Well on the NASDAQ, this means a clear break below 2500, and on the S&P 500, we would need to see 1230 taken out".

It still appears as though the NASDAQ may be setting up for a key retest of the 2007 bull market high. On October 31st, 2007, the benchmark index hit 2861, a level that would ultimately serve as the peak of a five year bull market. A clean breakout through this highlighted resistance level would be an important psychological milestone for this bull market.

Last week, the NASDAQ and S&P 500 both declined about .3%.

Volume ticked higher for the week on the S&P 500, but was flat on the NASDAQ Composite. Overall volume registered below average on both indices.

While the long-term trend is decisively to the upside, the intermediate-term trend is less clear. We are currently trading above the 10-week MA support line on both of the indices that we track, and near new bull market highs. But, as long as we trade within the highlighted consolidation range, the intermediate-term trend is neutral and we remain cautiously optimistic.

Key intermediate-term levels to watch on the NASDAQ include resistance at the 2007 bull market high (2860), support near 2500, and the 10-week moving average line near 2745.

On the S&P 500, keep an eye on resistance near 1350, and the 10-week moving average support line near 1310.

 

 

Our Dow Theory outlook has been updated with new potential intermediate-term support levels. These areas have been circled in blue.

The Dow Jones Industrial Average and the Dow Transports simultaneously confirmed new bull market highs recently, and key intermediate-term support levels have been updated accordingly. There are no other changes to our Dow Theory outlook, and we remain on a long-term buy signal.

 

 

The Dollar Index fell 1.3% last week, after slipping .5% two weeks ago.

The major target support area that we have projected for quite some time is finally within reach. While the short/intermediate-term trend is still to the downside, the Dollar has been ripping lower since the beginning of this year and may be slightly oversold.

At this point though, we would avoid trading against the trend. The long-term trend is still bearish, as we remain on a 10/40 week MA sell signal.

 

 

Keep in sync with the market by following our updates. We offer a variety of methods to connect with Portfolio Tilt in real-time. You can click here to follow us on Twitter. We offer an RSS feed, and for you Facebook fans, we have a page as well. We also offer a morning e-mail update with all of our most recent content, click here to sign up.