Bottom Line :
The indices had two strong momentum days Thursday and Friday. Probabilities are on the side of generally higher prices at least near-term.
Daily KRAs:
SPX
The area near 4000 should hold under any immediate bullish assumption. The Thursday-Friday rate of change is not sustainable and I would be surprised (only for the 7,393 time so far this year) if the SPX makes it through 4100 without some Balance/retracement.
NDX
Upper and lower KRAs are highlighted on the chart. Same general comments apply for the NDX as the SPX.
RUT
Levels for the RUT are highlighted on the chart below.
DOW
On Friday the DOW traded briefly below the multi-month Balance Area it has been forming since November. It’s quite possible the DOW is in the early stages of a false breakout trade. If this is correct the DOW may lead the rally and relatively quickly trade above is December high.
Internals
The 10-day and 5-day MA of NYSE advancing issues made higher highs while price was making lower lows Thursday, prior to the reversal. This may portend a generally higher market for at least several more days.
30m Breadth reached an upper extreme on Friday. This is likely the momentum peak of this development cycle. Ideally the SPX will work higher at a slower rate of change while breadth makes lower highs, eventually setting up a larger retracement.
VIX is once again below 20. Below 20 and prices are likely to move higher. Above 20 and prices are likely to move lower.
