S&P, Nasdaq Tag Fresh All-Time Peaks

• The major indexes cleared two levels of resistance last week on Tuesday’s breakout of the mini trading ranges from the prior week, while testing February resistance levels on Thursday and Friday. The higher highs sets up and explosive situation heading into the second quarter earnings season that starts in a couple of weeks.
• The 4% pop last week has pushed the overall market into overbought territory with the relative strength levels on the S&P and the Nasdaq clearing 70 on Friday. The Dow has a RSI reading of 68 and the Russell’s RSI is in the mid 60’s. A reading above 70 for a stock, or index, is considered overbought territory. However, readings can get stretched up into the 80’s and even the 90’s on higher highs and before a pullback occurs.
• With the July 4th holiday on Friday, Wall Street could be in a relaxed mode this week with many traders likely on vacation. While this could lead to some consolidation, or weakness, we also wouldn’t be surprised to see higher highs and extended RSI levels as the bulls clearly have the momentum right now.

Wall Street closed at record highs on Friday, despite President Trump’s threat to impose new tariffs on Canadian goods. This follows news earlier in the session that trade deals with China, and possibly India, could be announced in the coming weeks.

The Nasdaq traded to a record high of 20,311 before ending at 20,273 (+0.5%). New resistance at 20,250 was topped but held. Support is at 20,000.

The S&P 500 closed at 6,173 (+0.5%) with the intraday all-rime top at 6,187. Fresh resistance at 6,150 was cleared and held. Support is at 6,100.

The Dow made a trip to 43,966 while ending at 43,819 (+1%). Resistance at 44,000 held. Support is at 43,250.

Earnings and Economic News

Before the open: Zoomcar Holdings (ZCAR)

After the close: PetVivo (PETV), Progressive Software (PRGS), Quantum (QMCO)

Economic News

Chicago Business Barometer (PMI) – 9:45am

Technical Outlook and Market Thoughts 

The major indexes cleared two levels of resistance last week on Tuesday’s breakout of the mini trading ranges from the prior week, while testing February resistance levels on Thursday and Friday. The higher highs sets up an explosive situation heading into the second quarter earnings season that starts in a couple of weeks.

The 4% pop last week has pushed the overall market into overbought territory with the relative strength levels on the S&P and the Nasdaq clearing 70 on Friday. The Dow has a RSI reading of 68 and the Russell’s RSI is in the mid 60’s. A reading above 70 for a stock, or index, is considered overbought territory. However, readings can get stretched up into the 80’s and even the 90’s on higher highs and before a pullback occurs.

The Nasdaq cleared and held 20,100 on Thursday with Friday’s intraday backtest and low at 20,095. There is downside stretch to 20,000 with a close back below this level suggesting a false breakout and weakness down to 19,750.

Continued closes above 20,250 would suggest strength to 20,500-20,750. Our near-term target is at 21,500 for the index with our January 22nd target prediction at 22,000. This would represent another 6% and 9% gain from Friday’s close. The golden cross we have been highlighting over the past few weeks is now just 12 points away from forming.

The S&P 500 settled above 6,100 on Thursday while holding 6,150 into Friday’s close. The prior all-time intraday peak was at 6,147 so the close above it was an ongoing bullish signal heading into this week. There is upside potential to 6,350 into July or August with a shot at 6,500 by yearend. These were our Price Targets for the index from February 23rd.

A close back below 6,100 would be a slightly bearish development with downside risk to 6,000. A golden cross is now just 20 points away from forming and is typically a bullish sign for higher highs.

The Russell 2000 cleared 2,175 and the 200-day moving average on Friday but levels that held into the weekend. There is gap up potential to 2,300 and our near-term Price Target on continued closes above 2,175-2,200. The former represents prior support from late February and a 6% increase from Friday’s close at 2,172. Our February 23rd yearend Price Target for the index is at 2,500 and would represent a double-digit gain of 15% from current levels.

Key support is at 2,135. Another drop below this level could lead to a quick fade down to 2,075-2,050 and the 50-day moving average. A golden cross is 119 points away from happening for the small-caps.

The Dow cleared and held 43,250 on Thursday and prior support from early March/ late February. There is downside stretch to 42,750-42,500 and the 200-day moving average on a move back below this level.

Continued closes above 44,000 firmly get 45,000 and our near-term price target in focus with the all-time high from December 4th at 45,073. These levels are currently just 3% away. We believe a trip to 47,250 could come at some point this year which is an 8% return from current levels.

The Volatility Index (VIX) closed below 17.50 for the fourth-straight day with the 50-day moving average in a sharp downtrend. This level remains key resistance followed by 20 and the 200-day moving average.

We mentioned the index was in the early stages of forming a death cross and when the 50-day moving average falls below the 200-day moving average. This technical indicator typically indicates lower lows, and for the VIX, this would be an ongoing bullish signal for the market.

New support is at 16-15.50 with the past two session lows at 16.12 and 16.11, respectively. We have talked about continued closes below 15 during the upcoming earnings season possibly getting 13.50-12.75 in play for the VIX.

With the July 4th holiday on Friday, Wall Street could be in a relaxed mode this week with many traders likely on vacation. While this could lead to some consolidation, or weakness, we also wouldn’t be surprised to see higher highs and extended RSI levels as the bulls clearly have the momentum right now.