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Indices Pause At Resistance

Published 10/30/2014, 12:24 AM
Updated 07/09/2023, 06:31 AM

Tuesday's decent gain was followed with a consolidation yesterday. The relatively wide intraday range finished with a flat close; a close which remained in the range of resistance.

The S&P 500 has a resistance level at 1,987 based on the July high with supply kicking in around September congestion. This may evolve into a bearish head-and-shoulder reversal: for this to happen, look for a move back to 1,904 (August swing low) without a close above 1,987. Technicals are bullish, along with the bullish trend in the 200-day MA, so a head-and-shoulder reversal would run against the technical picture.

SPX Daily

The NASDAQ is coming up against former support turned resistance, and may offer itself as a shorting opportunity.

COMPQ Daily

Meanwhile, the Russell 2000 is trading around its 200-day MA. Given the relative leadership of this index, and the fact other indices have breezed past their respective 200-day MAs, I wouldn't look for the Russell 2000 to linger here for too long as it continues its rally. However, bears would win on a swift undercut of the 50-day MA.
RUT Daily

Shorts may be able to get some joy from today's open. Indices are trading near resistance levels which traditionally would offer bears something.

However, the rally from October's lows hasn't given bears many opportunities to attack, and today could see this trend continue. The first hour of trading might give some indication as to what may follow: a flat to soft open which fails to spark buying as the morning moves on could see some drift in the afternoon, and a chance for shorts to build their positions.

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