Friday, April 4, 2014

SPX and NYA: The Interesting Headline Generator is broken again...

On Thursday, the S&P 500 (SPX) made another new all-time high early in the session, then reversed and tested support near 1883 before recovering to end the day slightly down.  Even though yesterday's candlestick was technically a minor bearish reversal candle, I don't think much can be read into it yet, because so far support has held.  That said, sometimes these types of minor bearish candles function as early warning signs of a pending reversal from higher prices.

Meanwhile, although SPX and the Dow Jones Industrials (INDU) grab most of the headlines, higher beta indices like Nasdaq Composite (COMPQ) and the Russell 2000 (RUT) are still trading below their March highs.  It's possible we'll begin to see markets even-out a bit now that the Fed is hitting stride with the QE taper, and 2014 may end up having a different character than the frothy 2013 market.

Overall, there's been no material change in the outlook since Wednesday, other than to note that we can finally take the diagonal off the table since SPX broke through 1887.  I've also updated the near-term pivots to reflect the latest price action.  As a result of there being no change from Wednesday's more detailed analysis, today's update will require few words and I'll let the charts do most of the talking.  (If you missed Wednesday's update, please refer to SPX and NYA:  Equities Face Long-term Resistance).

SPX still faces long-term resistance in the upside target zone:

The NYSE Composite (NYA) has reached the first upside target zone.  Incidentally, if you're wondering why I frequently chart NYA, it's because this index is a much better representation of the total market than SPX or INDU.  Generally speaking, SPX and INDU tell folks if their blue chip portfolio is gaining or losing, but NYA tells us the health of the overall market. 

In conclusion, beyond updating the near-term pivots, there's very little to add to Wednesday's update.  It's worth noting that today is Non-Farm Payroll, which sometimes brings volatility.  Trade safe.

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