We had a pretty strong day, as the market bounced back from oversold levels. The NASDAQ returned to its old outperforming ways by nearly doubling the S&P 500′s 1% gain. So now it’s the NASDAQ that looks healthier, and the S&P that is showing chinks in its armor. The NASDAQ has formed a pattern similar to a morning star, but spanning 4 days instead of 3. ( IMO the psychology of the patterns is the same.) But while the NASDAQ bounced off its up-trendline, the S&P has only bounced back up to its trendline. We’ll see if that line now becomes resistance. The middle Bollinger Band could also be resistance for the indices. Another thing to note is that volume continues to decrease. (summer doldrums???) The bulls would like to see an increase in volume on an up day like today. Here are the charts:
The stochastic on both of these charts shows just how oversold the market became this week.
