Another crazy week in the markets with big tech throwing some after market curve balls, bond yields getting a little over excited and central bankers thinking about talking about something they should have done something about a while ago.
SPX is currently sitting in a very precarious position between its 200dMA and upper resistance.
A break in either direction from those areas may see a decent move.
Looking back over the past year at all the times the dip was bought once the 50dMA was breached and its clear the bulls took back control quickly after these mini sell offs.
Only in October did we see a breach on the 100dMA which lead to a much stronger flip to bull mode.
Now that we've seen the 200dMA breached and recaptured will we see a melt up with even more ferocity?
RSI is showing momentum isn't convincing either way atm with the bulls seemingly taking back control recently but failing to go on with it.
Advance/decline indicator showing that market is not looking healthy at all.
Market breadth has been falling away since November and this indicator is gaining more negative momentum each week.
If the upper resistance cannot be broken this week I'd imagine the next area bulls need to defend is 4280.
If this area is successfully defended without taking out that upper resistance then the wedge will get quite tight leading into March.
I dare say there'll be a lot of pent up energy if that happens and I'd expect a very big move from there.
SPX chart below
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Moving over to the XJO and we've seen a similar bounce from the January sell off.
Fridays trading was in favour of the bulls with a close above the 0.382 fib level.
Futures were pointing toward an open back below this level but a lot can change in a weekend so lets see how she opens.
If that same key fib level was broken to the upside once more then you can see theres a bit of resistance above with both the 0.5 fib level and overhead resistance converging around 7190.
This places the same importance on this weeks move as it's a similar story to the SPX.
Failure to breach resistance will need the bulls to defend the area between 6750 and 6835.
If that support area holds this may also start to coil the spring for a bigger move leading into March.
Current momentum has actually sided with the bulls for now with the RSI turning positive.
However market breadth looks very poor with the advance/decline indicators showing the XJO is also looking weaker by the day.
XJO chart below
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US 100 (NDQ) has a similar set up although it has already bounced back to around the 0.5 fib level and was firmly rejected.
This rejection pushed it back below resistance and this level was backtested in Fridays session with some heavy selling into the close
-advantage bears.
Seeing as big tech is seemingly propping up the markets this space is one to watch...
NDQ chart below.
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Interesting times ahead so good luck which ever way you're trading...
(20min delay)