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S&P 500 Hits All-time High; Russell Fights Resistance

David Becker
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S&P 500 Hits All-time High; Russell Fights Resistance

While the S&P500 worked through to all-time highs on Thursday, there was a continuous drumbeat towards the 2000 level for the $SPX. The market peaked out at 1994, which was 3 points higher than the previous intraday high. It closed at 1992, which is now the highest close. With the new highs, support has moved higher to the August lows around 1900.

The Nasdaq Composite surged to new highs in the last hour of the day. For a second day, the $COMPQ and Russell 2000 were weaker than the large cap dominated $INDU and $SPX in percentage terms. This same behavior was evident in March when the growth stocks rolled over, so growth investors should watch their stocks closely for signs of weakness.

The Russell 2000 has spent three days trying to break above the 50-day moving average. The small cap index displayed similar behavior in late May when the Russell took 9 days to break through and climbed well above the 50-day moving average. This is an important inflection point for the $RUT. The 200-day moving average is almost flat on the Russell, which suggests the major upward trend has moved to horizontal. Weakness so close to the flat 200-day moving average and 50 day moving average would be a wider signal of caution. The Russell is back to the middle of the trading range started last October.

A very bullish sign is that a closely watched indicator by technicians is the NYSE Advance-Decline line hit a new high. It continually adds the net number of advancers compared to decliners cumulatively every day and has been bullish and right for a couple of years now. As the market makes new highs, some major tops are usually preceded by divergences in the indicator.

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