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S&P 500 Eyes Breakout, Nasdaq Pauses, Russell 2000 Hesitates: What Lies Ahead?

Published 27/07/2023, 08:27
US500
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US2000
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IWM
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IXIC
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The headline would have been a small loss, but S&P 500 action over the past week and a bit have been for an index running alongside upper channel resistance, looking ready to break through higher. Technicals remain net positive, although the MACD is close to a new 'sell' signal. Even if this were to materialize, I would be surprised if it brought any serious selling and may offer a better buy-the-dip opportunity.

SPX Daily Chart

The Russell 2000 (IWM) didn't experience the modest selling the S&P 500 and Nasdaq did and managed to post a decent enough white candlestick, but buying volume was relatively light.

IWM Daily Chart

It's still a slow burn in the bullish relative performance shift versus the S&P 500, but On-Balance-Volume is moving more strongly in bulls' favor. More significant is the weekly resistance at $197, but we need to see what happens on Friday to confirm this.  

IWM Weekly Chart

The Nasdaq had pulled back from its last tag of channel resistance, so it had perhaps a little more 'value' to offer potential buyers than either the S&P 500 or Russell 2000 ($IWM), but it didn't deliver on this. The MACD trigger remains on a 'sell' with a bearish divergence and is underperforming relative to the S&P 500. Vacation volume clouds the issue a little, but it looks like buyers want to go for Large Caps over Tech stocks.

COMPQ Daily Chart

My next post won't be until next Tuesday at the earliest, so the end-of-week finish in the Russell 2000 ($IWM) is perhaps the most important thing to track. I want to see a breakout on a weekly time frame for this index - if not this week, then next.

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