The primary US trading indices are in another mind-numbing narrow range Balance Area, similar to what we experienced in late January into the early part of the New Year. The ultimate result will be the same – a sharp break and initiative, directional move.
No change to these comments from last weekend’s Report:
Closes by all four of the primary US indices above Thursday’s highs may signal an important low is in place. I say “may” intentionally. As much as we would all like for trading to be black and white it simply is not. We would also need to see this occur on very strong breadth and then relatively little retracement following closes above Thursday’s highs for a bullish assumption to be valid.
Below Friday’s cash session lows there is little potential “support” and we would like be in the final stages of a downside washout. Again, all four of the indices would need to take out Friday’s cash session lows to increase this possibility.
Daily KRAs:
SPX
Below current levels next potential support in the SPX is 3898-3874, then 3788-3762.
NDX
The NDX is currently trading in an important downside KRA (11957-11825).
Below 1825 and it’s a complete guess where the NDX could stop and at least Balance. I will key off the SPX levels for the NDX.
RUT
The RUT is at the mid-point of an increasingly mature Balance Area. Below 1875 the next Auction Market level is 1825, right at the 1/19 low and the 200 day MA.
RTY Profile
Here is the profile view of RTY:
DOW
There is nothing of substance below the DOW until 30843, which is another 5%+ lower.
Internals
Internals are presently not a lot of help. There is plenty of room to the downside before any extreme would be reached, but they have contracted enough to the downside that it isn’t bell-ringing the indices are about to break lower.
ALWAYS default to price action.
