Last Friday, the market closed on a high note, with a rally off the lows of 05/12. This was a bullish sign, yet the rally also pushed prices into a resistance area. The mixed sentiment from traders can be seen in today's major indices, with an inside day pattern found in the Russell 2000 (IWM) and the S&P 500 (SPY).
An inside day pattern is created when the total range of a price candle fits within the prior days' range. This creates an easy way to watch for either a breakout or breakdown, based on resistance/support from the prior day's high/low. However, a clean break over Friday's high brings the market back into a choppy area, while a drop past Friday's lows would have investors looking towards the next key support area to hold from 05/12.
Additionally, the Nasdaq 100 (QQQ) has resistance not only from Friday's highs but also from the 50-day moving average found at $326.84. As seen in the charts above, this gives us key levels to watch for a break over, with a clean support area to hold if bullish sentiment prevails.
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- S&P 500 (SPY): Held the 10-DMA at 415.25
- Russell 2000 (IWM): Support 215. Resistance 223.17
- Dow (DIA): Like this to hold over 342.43
- Nasdaq (QQQ): 326 resistance
- KRE (Regional Banks): 71.82 resistance
- SMH (Semiconductors): 233 pivotal area
- IYT (Transportation): 282.40 resistance
- IBB (Biotechnology): 147.11 support
- XRT (Retail) 96.27 resistance
Assistant Director of Trading Research and Education