Over the past week my core market health indicators bounced around, but didn’t see significant improvement.
However, I’m seeing other signs that the market can burst higher. First a weekly chart of the S&P 500 Index (SPX) has a clear break out of a bull flag with a successful retest (after a fake out). MACD confirmed the retest by not showing a bearish crossover. RSI on the weekly chart is also well above bear market levels.
Next we have the Nasdaq 100 (NDX) compared against SPX. This ratio is breaking above its 20 week moving average. This condition usually results in a market that moves higher. Technology has been lagging since December 2015, but it appears that it is starting to lead again. If this condition persists it should fuel a good sized move higher in the general market.
The only fly in the ointment is the Dow Theory. The transports (Dow Jones Transportation) still haven’t broken above their last secondary high. If DJT can get above 8110 it will signal that we’re in a long-term bull market again.
Conclusion
My core indicators and Dow Theory still aren’t confirming an all clear signal, but weekly SPX indicators and NDX performance suggest a good sized rally is in our future.