Drawing Lines in the Sand

Mid-week market update: As the bulls and bears battle it out during this phase of consolidation, it's time to set out some lines in the sand to see which side has the upper hand. The accompanying chart shows the S&P 500, the equal-weighted S&P 500, and the Russell 2000, along with their respective rising trend lines (dotted lines), their 50 dma, and levels of likely support.

 

 

Here are my takeaways:

• The S&P 500 and equal-weighted S&P 500 are testing their rising trend line while the Russell 2000 has been below the trend line for several sessions.
• All three indices are trading just above their 50 dma initial support.
• The S&P 500 can find decent support at about the 6500 level, and the equal-weighted S&P 500 and Russell 2000 are very close to their 50 dma and secondary support levels. Violations of those support levels opens the door to deeper price weakness.

In other words, there are few clear signs of bullish or bearish dominance.

The full post can be found here.