The State of the Trend
Last week we observed that the daily, weekly and monthly trends for the three major US indices were pointing upwards, and all of them were bumping against long-term resistance. After Friday's employment report, the trend in all timeframes remains unchanged, but the Q's are the only ones that were able to break above resistance. Judging by the monthly chart below, they have another 5% upside potential before reaching the next resistance level at around 65. In the meantime, 60 becomes an important resistance turned support level to watch:
As mentioned before, the resistance zone for the DJIA remains in the 12800-12900 area:
While the SPX has the most ground to cover in order to break above the 1370 level:
Following the relentless advance since December '11, and the opening gap on Friday, the weekly SPX has finally decoupled from the trend indicator and is approaching overbought levels historically associated trend changes. For next week, the overbought zone comes in above 1370, with the trend indicator currently at 1318.
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