The S&P 500 Looking to Join the Dow, Russell 2k to New Highs
- The S&P 500 is making up ground on the Dow and Russell 2k
- Rotation into the tech-heavy Nasdaq 100 is helping keep the train moving forward
- The path of least resistance is higher, would require a strong bearish signal to flip the script
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In Tuesday’s post, we discussed the glaring divergence between the major US indices. The Dow and the Russell 2000 (small-caps) have been strong like bull, trading to new record highs. Yesterday, the Russell made it 10 successive days up. Impressive. The S&P 500 is slowly slogging through resistance levels and in the process it's playing catch-up to the Dow and Russell, with new highs just on the horizon.
The Nasdaq 100, the index we said to keep an eye on, is thus far looking to invalidate the ‘head-and-shoulders’ top we had drawn in as a possible scenario should it break support. It’s not out of the woods yet, but with a little more push it will make that scenario null and void. We made note on Tuesday that the Nasdaq would be a key determining factor in shaping our broader bias. So far, rotation into NDX bellwether stocks is helping push the broader market higher.
The 2170/82 resistance zone in the S&P was cleared, with 2188 up to the record highs at 2194 now standing in the way (yesterday’s high is 2188). We will look to 2170/82 as support on a dip, with expectations of seeing more upside. It’s a tough spot to be a buyer when the market has already surged and strong resistance stands in the way, but the path of least resistance is up, and until we see a thorough push to the 2194 highs or better the market likely won’t back off much. So, while buying at this stage is tough, shorting is likely to be more difficult. For this view to change, it would require a strong rejection at resistance or just above before we would consider trading a decline with any aggression.
Short-term traders (day-traders) can look to ride the waves both ways, but the winds are at the bulls’ back until the market provides further notice.
S&P 500: Daily
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.