SPX:
(click on the chart to enlarge)
Similar divergence was observed on the NDX as it pulled back to the 4500ish level. It could dip back to retest the 4546 level on the closing basis in the near term. For this index, the A/D is also a key breadth indicator to watch for clues on the strength of next rally. Near term potential resistance is the recent all time closing high at 4719.05. Continues to monitor for climactic move to take out the all time high that was made back in March 2000; level to watch is 4816.35!
NDX:
The Russell 2000, RUT has been lagging all the other major market indices as it bounced from the September 29, 2015 low. After recent pullback to test the 12/16/2014 close, it has bounced back with increasing strength and showing signs it wants to move higher as it attempts to move above previous pivot high near 1200. For the near term, potential support could be near the 1180 level and the potential resistance near 1215.
RUT:
As the Russell 2000 is making its attempt to catch up with the other major market indices, watch for rejuvenated interest in the biotech sector. If the biotech ETF, IBB breaks above the recent pivot high near 341, it could help push the RUT higher and trigger the euphoric phase that could result in a climactic market top.
IBB:
Another sector to monitor for potential upside is the semiconductor (SMH). Some of the stocks in this sector have begun to make an upward move off the recent pullback low. The market could be starting to price in the tech gadgets as the favorite gift items for this Christmas season.
SMH:
This Friday, the latest non-farm payroll number will be reported and that could generate higher volatility as the market attempts to guess what the FED will do with the interest rate for the remaining 2015. There are many market participants waiting for this market to rollover as the internals and historical market top similarities appeared. But one should not forget, the market will rarely do the obvious because it will fool most of the people most of the time. Therefore, watch the price as it is the deciding factor on what the market will do, not the overbought oscillators or the underlie fundamentals. The market will decide when it will start pricing in the fundamentals and to what extent. Until the market has signaled a reversal, a new all time high remains to be a near term possibility.
