Guy S. Ortmann, CMT | Mar 28, 2022 09:32AM ET
The major equity indexes closed mostly higher Friday with only two posting minor losses as all closed near their intraday highs. However, internals were split with the NYSE’s positive and the NASDAQ’s negative.
The only technical event of note was the SPX closing above resistance while the resistance levels on the remainder of the charts remain intact. Meanwhile the data, in our opinion, continues to imply the markets may likely stay in a period of consolidation from their recent nearly vertical gains from the middle of the month. As well, the valuation gap has widened a bit given the recent rise in the 10-year Treasury yield.
On the charts, the COMPQX and NDX closed slightly lower Friday as the rest posted gains. While the NYSE saw positive internals on higher volume, the NASDAQ internals were negative as trading volumes rose there as well. All closed near their highs of the day with the only technical event of note being the SPX closing above near-term resistance as the resistance levels of the rest of the indexes remain intact.
The nearly vertical and sizable gains on the indexes post their 3/14 lows suggested to us that a period of some consolidation remained most likely, as was typically the case when charts have sizable and rapid moves to high volume resistance levels.
The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ remained positive but below their 50 DMAs. Regarding stochastic readings, the RTY registered a bearish stochastic crossover as the rest were still overbought.
The data finds the McClellan 1-Day OB/OS oscillators remaining overbought (All Exchange: +70.46 NYSE: +69.14 NASDAQ: +72.62).
In conclusion, while the SPX violated resistance Friday, the McClellan OB/OS oscillators and stochastic levels suggest some caution while very bearish investor sentiment remains a counterbalance. As such, we continue to suspect some further consolidation of gains may be the most probable near-term outcome.
SPX: 4,456/4,574 DJI: 34,362/34,940 COMPQX: 13,844/14,225 NDX: 14,383/14,778
DJT: 15,745/16,585 MID: 2,642/2,717 RTY: 2,015/2,090 VALUA: 9,426/9,647
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