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After Neutral Finish Last Week, Indexes Look Ready to Rally

Published 24/04/2023, 06:05
Updated 09/07/2023, 11:31

There was the risk Friday was going to see markets drift away from their generally bullish setups. Instead, indexes closed the day with small bullish 'hammers' or neutral doji that gives bulls an opportunity to mount a period of buying. 

The  Russell 2000 successfully defended its 20-day MA despite remaining pegged by 200-day MA resistance. Technicals are a mix of bullish MACD, On-Balance-Volume, and ADX, with bearish intermediate stochastics and underperformance against the Nasdaq.

IWM Daily Chart

The Nasdaq retains 20-day MA support on higher volume accumulation. Technicals are mixed, with a 'sell' trigger in the MACD and On-Balance-Volume, but firmly bullish stochastics and ADX.  The Nasdaq has drifted into a period of underperformance against the S&P 500, but it's a relatively minor loss. 

COMPQ Daily Chart

The S&P 500 has the most bullish technical picture and closed Friday with a doji.  A break of February's highs is necessary to kick start the formation of a right-hand-base and deliver on the bigger challenge of reversing losses from 2021.

SPX Daily Chart

SPX Weekly Chart

For the coming week, we want to see the subtle defense of moving averages on Friday develop into something more. It would probably take only one down day to kill the bullish potential of last week's finish. A move above Friday's highs might be enough for an aggressive long.

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