Weekly Market Outlook - Higher Highs Hit, But Higher Hurdles Ahead

The other item of interest in the weekly chart of the Nasdaq Composite -- and only of the Nasdaq Composite -- is the fact that with last week's 4.5% gain we've bumped into a technical resistance line (blue, dashed) that connects all the major peaks since September of 2019.

That's a scary scenario, but traders aren't overwhelmingly scared yet. The VXN (or the Nasdaq Composite's "fear gauge") remains solid and steady right around 28, which leaves plenty of room for a little more downside before it hits an absolute floor near 14. That's potentially bullish. In fact, until the VXN pokes above its falling technical resistance (the thick solid blue line) currently at 35.2, there's no reason to even think about panicking.

Zooming into a more detailed daily chart of the composite doesn't show us much more, but it does illustrate exactly where the composite's most likely support levels are should a selloff ensue. Those are the moving average lines, starting with the 20-day moving average line (blue) currently at 13,034. That was the floor the Nasdaq pushed up and off of at the beginning of this month.

Nasdaq Daily Chart, with VXN

Source: TradeNavigator

Just for a little better feel for the market's current condition, we'll look at the weekly chart of the S&P 500. It does appear the bullish momentum is weakening, but its bullish momentum nonetheless. The MACD divergence is no longer diverging but converging. Even without the MACD indicator's subtle clue though, a visual inspection of the S&P 500's chart shows us progress isn't being made quite as quickly as it was just a couple of months ago.

S&P 500 Weekly Chart, with VIX and MACD

Source: TradeNavigator

The biggest reason we're reviewing the weekly chart of the S&P 500 is to show you where the updated Fibonacci retracement lines currently lie. Should a pullback start to take shape straightaway, the 38.2% retracement line stands at 3223. That would be a 16.6% correction from last week's peak, which would be a fairly typical bull market correction.

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