Here’s a quick look at what happened until last Friday:
Tensions with North Korea, hurricanes and tax reform conflicts are some that shook the market. Such noise-driven headline increases the market volatility. The Nasdaq dropped by 1.2%, while the Dow and the S&P 500 finished with respective losses of 0.9% and 0.6%.
On a lighter note, the market indices may have settled lower for the week. But it remains within striking distance of its all-time high.
It seems like the major indices are giving back the gains made in the previously. Nasdaq (-1.2%) was the worst to be hit by the unsettling news above. This was followed by Russell 2000, Dow Jones and finally, S&P 500. Overall, Nasdaq continued to hold the helm with strong returns of more than 18%. Dow is the next index to project a double-digit figure of 10%. S&P 500 and Russell 2000 continued to be laggards in 2017.
It looks like Dow Jones continue to digest its gains. Right now, it found support and resting on the rising 50DMA line. This pullback feels normal and still bullish. See if it stay above the line or leap higher next week. Another bullish sign is that the index is just below its all time high by a mere 1.5%.
In the weekly chart, Dow Jones showed why it is one of the leading indices. It refuses to decline beyond 21,500 even after six weeks of consolidation. It also stayed above the support line while weekly volumes decrease. A sign that the institutional investors are not keen to unload its shares any longer.
After reaching all-time high, it began its gradual descent. But it is resisting a pullback to rising 50DMA line. Another positive note is that it's just 1.6% below all-time high. See if it can make a reversal and pushed higher next week.
A bullish sign in the weekly chart is Nasdaq staying above 6300. It refuses to repeat a similar decline like several weeks ago. Another one is the selling volume for the week is lesser the previous. That'll definitely mean the unloading session is ending soon.
Similar to Nasdaq, S&P 500 in the daily chart shows resilience and strength by (1) fighting to be close to the all-time high by 0.94% and (2) it is floating above the rising 50DMA support line. See it a new uptrend can propel it to new high.
S&P 500 remains above 245. Like Nasdaq in a weekly chart, it refuses to repeat a similar decline like several weeks ago as it rest on the support line. Another one is the selling volume for the week is lesser the previous. That'll definitely mean the unloading session is ending soon.
Russell 2000 underperformed as compared to others. After a sharp decline in late July, it reversed and recovered until the end of August. After that it digested its gains in a tight price actions. Except that it's doing so under the dropping 50DMA line. In short term, see if it can pierce through the 50DMA line and stays there for several days to gain traction.
I've drawn two parallel lines (horizontal channel) on the chart. It's to show you that the index still hasn't show any signs that it wants to break above the higher resistance line in the stagnant pattern.
The index reacted to the market by turning negative. It is turned from neutral to fearful in matters of days. According to contrarian principles, the more fearful people are, the powerful the market rally will be. Only time will tell if this is true.
Looking at the charts above, the stock market continues to be strong.
Here's what caused the short-term slide in the market indices. Sellers unloaded their shares as they feared for Hurricane Irma to hit Florida and parts of the East Coast.
In a bigger picture, the recent chart action is still healthy. The market continues to stay close to record highs.
Two quick reasons why the market action remains bullish.
So, until we see any heavy volume selling, the bulls remain in clear control.