Friday's Market Minute: Red Week Barely Bruises Bull

After six green weekly candles amounting to a plus-5% climb, the S&P 500 futures contract is likely to log a red week. The /ES is up over 10% since the August lows, making this paltry weekly decline of about 0.3% seem like a mosquito bite. Nonetheless, several signs of slowing momentum appeared on the daily chart this week that may give technically-minded traders something to think about: the MACD completed a bearish crossover; the RSI crossed from the overbought area to below 70; and the Average Direction Index is declining from a peak which suggests the uptrend is weakening.

Traders are likely to be eyeing the 3,100 area for signs of a shakeout, while the 20-day EMA near 3,080 could be further a point of support. On the other hand, what if this is merely a point of consolidation where the market is finding a foothold to continue climbing? Monday’s all-time high of 3,132.50 is clearly the number to watch if so. Beyond that, a move above 3,140, the upper trendline of a Rising Wedge pattern that began in August, could mean a bullish breakout.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

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