The S&P 500 and the NASDAQ indices have both enjoyed four week runs off of the triangles I focused on in my last article. The S&P stopped at its blue upper long term channel line as it has been a pretty reliable line. The Nasdaq got a little frothy as it got well above its blue upper long term channel line in an attempt to ring the bell at the 5000 mark. Late this past week, however, these indices fell out of their red four-week ascension channels as seen in the charts below.
The extended move in the Nasdaq has turned sentiment very bullish but with it failing to break the 5000 mark sentiment will likely shift to neutral if the Nasdaq starts drifting downward. The real test will be when the Nasdaq gets back down to the blue upper channel line in the 4900 area. If the Nasdaq can stay above the upper blue channel line it will keep bullish sentiment going, however, if it slips through that line this breakout attempt to reach 5000 will have meant nothing and will be looked upon as a negative and likely weigh heavily on sentiment.
If the S&P starts declining soon, I would expect it to be measured until traders see what the Nasdaq does when it reaches the 4900 blue line area.