Market Condition Summary
The major indexes are responding bullishly to what appears to be the eventual passage of tax reform legislation that favors corporations and enhanced profit opportunities for publicly traded companies. From a technical perspective, the markets are flashing overbought signals and appear to be getting ahead of themselves. At the very least, consolidation is in order and perhaps confirmation tests of more recently established support levels.
SP-500 eMini (Dec-2017): Making a new high. Price action overextended and now trading above upper range of bullish channel. Therefore, I anticipate consolidation and high probability for a pullback/mild correction and confirmation test of new support levels @ 2624 and 2594.
Nikkei 225 (Dec-2017): Setting up for resistance test and double top @ 23445. This becomes highly probable given today’s breakout after 9 days of consolidation. Bullish channel remains intact.
DJ-30 Mini (Dec-2017): Chart patterns for the Dow are similar to SP-500. Price action is overextended and the index is now trading above the range of its bullish channel, which represents a technically overbought market condition that is also subject to a pullback. Look for consolidation, if not support tests @ 23809 and 23562.
Nasdaq-100 (Dec-2017): Despite yesterday’s selling, the bullish channel remains intact as there is support @ 6280 level. Typically, it takes more than one day to confirm a reversal. If support holds going into the weekend, then anticipate a retest of high @ 6429.5.
Russell-2000 (Dec-2017): 3 consecutive days of new highs has clearly set small-cap stocks on fire. Today is a continuation breakout from a classic cup-with-handle pattern originating back from early October-2017 on the daily chart time frame. This index is also overbought, but has support @ 1517 to 1520 levels.