Some choppy price action in the US stock markets recently, and it will make more sense when we discuss the charts below, but we seem to finally have direction. In recent weeks, I have outlined technical zones that traders and investors should be watching. Those zones have seen developments pointing to more market highs!
The big talk on the street is the Nasdaq. The tech/growth index is officially in a NEW BULL MARKET for the first time in three years as it has recovered 20% from its lows. Tech stocks are showing that traders and investors believe the Fed will pivot and potentially even cut interest rates this year. Some even say tech stocks seem like an attractive alternative to banking stocks given recent financial sector turmoil. Others say all markets are ripping on banking fears easing.
The Nasdaq confirmed a breakout with a candle body close higher yesterday. It is extending its gains from yesterday which saw the break and the Nasdaq officially entering into a bull market. The tech index is being boosted by mega cap stocks such as Amazon, Microsoft and Apple.
This breakout confirms a higher low swing on the Nasdaq after the breakout above 11,800 from early February 2023. While the financial media is saying this is a new bull market, we have been saying a new uptrend began with the breakout in early February 2023. Markets have just been choppy and it has taken a long time for the first new higher low to form.
Going forward, the Nasdaq will need to hold above the 12,800 zone in case of a retest. The next resistance target comes in at 13,600.
The S&P 500 also maintained above the major trendline staying above 3850. This trendline was our make or break bull trigger. Buyers stepped in and the trendline held. This was a bullish sign for us.
Recently, the S&P 500 formed a wedge, with prices just coiled and restrained between two trendlines. Yesterday confirmed the breakout, and also a close above 4000. Going forward, we would like to see the S&P 500 remain above 4000 in case of a retest. 4200 is the next upside target.
The Dow Jones is a market I have had a keen interest in based on the technicals. While the S&P 500 and the Nasdaq remained above their uptrend zones, the Dow actually broke down and was in a new downtrend.
The breakdown happened on March 9th 2023 with a close below the 32,680 zone. Since then, the Dow pulled back after no follow through, but this is normal in breakouts and breakdowns. The retest was the key and it appears that the bulls have beat the bears!
The bulls have managed to get a close back above the breakdown zone, which means that technically the downtrend is over. This supports the moves we are seeing in the Nasdaq and the S&P 500.
Going forward, the next target on the Dow Jones would be the 34,500 zone.