Another Good Finish To The Week

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Markets have effectively cleared the first hurdle of the most recent swing high. Speculative indices - the Nasdaq and Russell 2000 - have also started to outperform the more conservative S&P 500.

The S&P 500 is about to edge past declining resistance, as defined by the March-April highs (4,637), something the Nasdaq has already achieved, but the Russell 2000 has yet to do. When it does it will soon come up against the 50-day MA. Then the next real challenge is the 4,300 level, which was resistance at the end of April/beginning of May. 

The Nasdaq has some fresh air to play with, as it looks ready to mount a challenge on 13,000 resistance (also from the end of April) and its 50-day MA. We still have the MACD trigger 'buy' signal, but On-Balance-Volume, ADX, and Stochastics remain on the bearish side of the fence. However, the relative performance gain over the S&P 500 should attract more buyers.

The Russell 2000 has been outperforming peer indices since April, and we are seeing that strength translate to other technicals. Once the price makes it past declining resistance, which is also near the 50-day MA, it will open up a big gap to next real resistance at the 200-day MA. 

Markets have continued to work through a rally off a bottom, which kicked off when breadth metrics were heavily oversold. We may still be looking at a bear rally, but bear rallies can last a while and investors shouldn't be concerned about bear rallies at this stage (given the losses already incurred to get to this point). I still think we have a decent market bottom ahead of us, but that feels like an unpopular view.