S&P 500 Tech Update: Bid Likely to Remain Firm
- The S&P 500 held and trading higher off key support at 2194/87
- Looking for the market to continue to hold a bid
- Global risk appetite is supportive, end of year forces also at work
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The title of Monday’s post was, “Will the Market Respect Support This Week?”. So far, the answer has been, yes. The support zone we had penciled in at 2194/87 will be our line-in-the-sand for the foreseeable future.
Yesterday, the Dow and Russell 2000 both notched out new record high closing prints, while the Nasdaq Composite trails not far behind. The Nasdaq 100, largely dominated by several large-cap favorites (GOOG, FB, AMZN, APPL, NFLX) is the only potential concern, as those leading stocks may indicate ‘hidden’ weakness. But a rotation back into the market darlings could take shape and negate the bearish divergence we are currently seeing. For now, it’s a concern on the backburners, with general risk appetite healthy.
Looking globally, the Nikkei is still holding strong on its surge following the U.S. presidential election, while Europe is being led by the CAC and DAX. The CAC broke out yesterday, the DAX today. Barring a failure by day's end in Germany, the breakout is significant. This adds to an already solid appetite for risk. Year-end forces are also at work here, so seasonality through to January is likely to help keep a bid in the market.
The trend in the S&P is firmly higher, but don’t hold your breath for a rip-roaring rally. Typically, these advances into record territory happen in a slow, grinding fashion. With that said, as long as we don’t see any type of swift reversal event and break in trend (i.e. lower low beneath 2187) the technical structure will remain constructive. Minor resistance around the Feb ’15 trend-line shouldn’t pose much of a threat moving forward, while the Feb trend-line from this year may act as short-term resistance upon another touch at higher prices.
S&P 500: Daily
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---Written by Paul Robinson, Market Analyst
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