After the market has been up for four consecutive days, a modest down day to consolidate the recent gains should not be surprising. The price chart below shows the SP500 (SPX), Dow Jones Industrials (DJI), and the Nasdaq 100 (NDX) closed near where they closed yesterday. The Russell 2000 (RUT) was the worst performer and it closed near the low of the day. The RUT also dipped back into the Fibonacci retracement zone. The SPX & DJI are out of the retracement zone and could encounter resistance at the Fib 78.6% level. As the big cap tech stocks continue to outperform, they have pushed the NDX closer to its multi-year high.
(click on the chart to enlarge)
The key levels to watch for these indexes are those within the Fibonacci retracement zone. If they pull back into the retracement zone, they need to hold the 50% retracement level and bounce back above the 61.8%. If this pull back maneuver is successful, then the indexes could be making its way back to recent high. If they failed to hold the 38.2% support, then the recent downtrend could be back in play.
Until the indexes closed at a new high, this rally remains to be suspicious.
