Bulls put foot down. Bears had an opening but were unable to make much out of it. Another opportunity to take on the snorting bulls may be just around the corner.

Since the S&P 500 large-cap index (3297.59) peaked at an intraday high of 3337.77 on January 22, bears had an opening. From that high through last Friday’s low, the index quickly dropped 3.7 percent. In fact, in a gap-down session seven sessions ago, it fell out of an ascending channel from early October last year, ending last week poorly. This was as good an opportunity as the second half of September last year when the index shed 5.5 percent, but only to find support at the 200-day moving average; plus, there was massive support north of 2800 (Chart 1).

This time around, the 50-day came in the way of bears. The average has not been lost for nearly four months. Last Friday’s low kissed the daily lower Bollinger band just above the 50-day. Bulls obviously used this as an opportunity on the long side. With two sessions in this week, the S&P 500 is up 2.2 percent – back into the channel. The January 22 high is 1.2 percent away and has taken on importance.

Over on the Nasdaq 100 index, the ascending channel from last October was never breached. As a matter of fact, in all of last week as well as this Monday, bulls repeatedly stepped up in defense of this (Chart 2). After having defended the channel, bulls Tuesday pushed the index to a fresh high. The two-session, 3.9-percent intraday drop late last year quickly became a thing of the past.

Tech has been a go-to sector for a while now. The Nasdaq 100, as well as the Nasdaq composite, were the only major US equity indices not to have a down January (more on this here). The rally, of course, is top-heavy, with the top five – Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN) and Facebook (FB) accounting for over 44 percent of the index.

From the lows of last October, the Nasdaq 100 is already up 25 percent, and 58 percent from the lows of December 2018! Things are way overbought, but bears have not been able to make much out of the opportunities offered. In fact, because Nasdaq's short interest is at a four-plus-year high, shorts unwittingly could very well be lending a helping hand to the uptrend (more on this here). With Tuesday’s rally, the Nasdaq 100 is at the upper end of the aforementioned channel. Remains to be seen if this leads bulls to pull in their horns a tad.

Speaking of defense of support, small-cap bulls were not far behind. Last Friday, the Russell 2000 small cap index (1656.77) ended right on crucial two-year support just north of 1600 (Chart 3). Monday and Tuesday, it rallied 2.6 percent, reclaiming the 50-day, albeit only slightly.

That said, the index acts the weakest and has for a while. The January 17th intraday high of 1715.08 fell short of its all-time high of 1742.09 from August 2018. Other major equity indices have all rallied to new highs.

Nearest resistance lies at 1680s. What happens around here will be a tell. Similar levels on the S&P 500 and the Nasdaq 100 respectively include resistance at 3330s and the aforementioned channel resistance. 

Thanks for reading!