With the tension of tariffs easing a little, markets now face a new challenge with Israel-Iran hostilities. But even with the retest, we still have key markets participating in bullish advances from April lows, and these tensions don’t change this.
The Russell 2000 ($IWM) dropped back to test combined March and May swing highs. This test was combined wth ‘sell’ triggers in the MACD and On-Balance-Volume, but stochatics remain in overbought and therefore, bullish, conditions.
The Nasdaq is on course to challenge all-time highs, easing back to May swing highs on light volume (well below the prior day’s higher volume accumulation). Technically, there is only a mild ‘sell’ signal in the MACD. Note, the 20-day MA is approaching to lend a hand as support.
The S&P is in a similar state to the Nasdaq as it pulls back to May swing highs and 20-day MA support. It too had a weak MACD trigger ‘sell’, but it aslo experienced confirmed distribution on Friday.
In breadth metrics, we have the Percentage of Nasdaq Stocks Above the 50-day MA in the process of confirming ‘a top’ of note. So, we are likely to see some escalation in the downside, but not necessary an end to the larger rally; it’s simply a message you are a buyer, you are better off waiting for a better low.
Although the Nasdaq Summation Index ($NASI) hasn’t yet topped out bar a ‘sell’ trigger in the MACD.
On a final note, Bitcoin ($BTCUSD) is shaping a new handle between 100K and 112K, although the ‘bull flag’ breakout is still in effect as the MACD, On-Balance-Volume and +DI/-DI are all on ‘sell’ signals.
In the short term, look for a near term bounce, but if May highs are breached, then it could be a couple of weeks before we see June highs challenged; I’m liking 50-day MAs as the next test. —
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Investments are held in a pension fund on a buy-and-hold strategy.
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