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Nasdaq Composite Hits Resistance, S&P Notches All-time High

David Becker
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Nasdaq Composite Hits Resistance, S&P Notches All-time High

The Nasdaq Composite typically leads in up trends but have focused on the broader S&P500 ($SPX) equities near market tops. One way to track those changes, is watching the divergence of the highs between the $SPX which is making new highs and the $COMPQ.

On Thursday, the Nasdaq Composite tested an important level because it is at the level where the Nasdaq topped in January, which makes it an important area for resistance. The price is testing the ‘right-shoulder level’ of the commonly seen head/shoulders formation. The Nasdaq created a lower low, so now we are watching to see if a lower high forms. If the market meets resistance here, it would add to trader’s trepidation that the technology index will not break out.

One of the key principles of Technical Analysis is the principle of higher highs and higher lows as the definition of an uptrend. Downtrends are started by lower lows and lower highs. When the market reaches key levels after making lower lows, we need to focus on the price action around those previous levels.

The S&P 500 index hit a new all-time high. This new high is supported by the French ($CAC) and German ($DAX) markets also making new highs this week. The push higher on the S&P 500 above 1900 has forced short positions to be closed as the market moves higher.

chart-nasdaq-composite-hits-resistance-sp-notches-time-high.png

Momentum on the large cap index is strong as the MACD (moving average convergence divergence) index hits its highest levels seen in the past 3-months. The RSI (relative strength index) is moving higher with price action reflecting accelerating positive momentum while printing near 63, which is the upper end of the neutral range.

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