Friday saw the indices close near the lows of the day as Semiconductors tagged resistance and its 20-day MA. Supporting technicals offered a mix of bullish and bearish markets but shorts have their opportunity with a stop above 1,334.
The S&P edged a close above the bullish mid-line in stochastics along with a 'buy' in On-Balance-Volume. However, the index also experienced a relative loss against Small Caps as it struggles to attract new buyers.
The Russell 2000 pushed across the bullish mid-line and is close to a new MACD 'buy' trigger. While the Russell 2000 is outperforming against the S&P it's underperforming against the NASDAQ. However, a push above the 20-day MA may be enough for it to regain overall leadership.
The NASDAQ may be the relative market leader but Tech indices closed lower where Large and Small Caps finished higher. A loss tomorrow will kick off the potential development of a new downward channel, marking a continued expansion of the consolidation.
The longer term charts are more mixed. NASDAQ breadth metrics (Percentage of Stocks above the 50-day MA, 200-day MA, Summation Index and Bullish Percents) are caught in a bit of a no-man's land and are not oversold so it's neither a buy nor a sell.
Similarly, the number of new 52-week highs and lows do not signify a top or a bottom but look to be favoring further weakness as 52-week lows show a gradual increase but as yet haven't spiked or gained above the number of new highs.
The Dow Transports-Industrials ratio has again tagged its support neckline as it pressures the 'bear trap' following last weeks 'bull trap'. There is a big void down to 0.20s which is likely to coincide with a weakening of the economy (weak transports = weak demand for goods).
The employment rate and Michigan consumer sentiment are also at levels more associated with a top than a bottom.
Going forward, bulls will need to be careful about committing to buying dips beyond anything with a short-term timeframe (> 6 months). The best strategy for long-term buyers is to wait for markets to come back into the zone last presented in February 2016 and highlighted in my tables below this article.