It has been a volatile past few days since the New Year rolled in and Markerts have been making big moves up and down over the space of days. The one index to watch for the coming couple of weeks is the Semiconductor Index (SOX). The gains to new highs is narrowing the retracements zones with 5,400s coming into play more as a pullback target.

(Click on image to enlarge)

The Russell 2000 (IWM) has returned to net bullish technicals with a new breakout on higher volume accumulation. This is a solid bullish move from an index that has struggled to build a long running rally. The index is 15.1% above its 200-day MA, that places it in the 10% zone of historic price extremes. If it gets to 17%, then it will reach a 5% price extreme, last seen in April 2021.

The S&P is holding its breakout, a breakout that is 9.6% above its 200-day MA, but is not yet extended. The equal weighted S&P is doing significantly better and if looking beyond tech stocks there is opportunity.

The Nasdaq has edged a breakout from its symmetrical triangle, but it's a modest breakout. Technicals are net bullish, but it has been struggling since the latter part of 2024. Finding buyers has proved problematic, even as the Semiconductor Index posts new highs.

What may help tech indices is Bitcoin. After surviving the 'bear flag' it move into a trading range, which now finds itself (successfully) testing converged 20-day and 50-day MAs, with technicals net bullish.

For the rest of the week, we want to see bulls hold the gains so as to sustain the long standing weekly rallies in lead indices. It does like the Russell 2000, equal-weighted S&P, and Dow Jones Industrial Average (not covered here) will do most of the leg work, with the regular S&P there to lend support as needed. The Semiconductor Index looks to be running on fumes, and is at risk of a blowoff top. November's losses in the indices didn't deliver the value buying opportunities I had hoped for, but momentum traders have something to work with.

More By This Author: