Raising My Outlook to 'Neutral/Positive' Amid Improving Market Technicals

 | May 10, 2018 | 10:12 AM EDT
  • Comment
  • Print Print
  • Print

The market's major indices have finally broken out of their sideways patterns sufficiently to alter my near-term outlook from "Neutral" to "Neutral/Positive," with the caveat that recent gains might see some retracement due to high stochastic levels.

We finally saw some breaks above resistance Wednesday that moved the big indices out of their prior sideways patterns and into near-term uptrends. The S&P 500, Nasdaq Composite, Nasdaq 100, S&P MidCap 400, Russell 2000 and Value Line Arithmetic Index all violated upside resistance on a closing basis, with the SPX closing back above its 50-day moving average as well:

Both the Dow industrials and Dow transports also closed above their 50-DMAs, but were unable to break resistance. Here's the Dow-30 chart:

And here's the Dow transports' chart:

Since neither broke through its upside resistance on Wednesday, both remain in neutral/sideways patterns. However, the rest of the market's major indices are all now in near-term uptrends.

The main reason for my not being even more positive on the market is that we now find all of the indexes with the exception of the Dow Transports at overbought levels on their stochastic readings. These stochastics can stay overbought for extended periods, but might also imply a potential retracement of recent gains.

Columnist Conversations

We are very close to a trigger for entry in BIDU against one of the standout zones discussed in Monday's artic...
Red Robin (RRGB) getting pounded by 17% after seeing its first quarter same-store sales 0.9%. Hey, it's tough...
Just touched down for a week of meetings in San Francisco (tech companies of course). Read an interesting arti...
Paypal's Dan Shulman was interviewed by Jim Cramer at the 'teachin' bootcamp on May 5.  I was in attendan...

BEST IDEAS

REAL MONEY'S BEST IDEAS

News Breaks

Powered by
Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.