Lets take a look at those weekly index charts...
IWM (representing Rus'2000 small cap)
The Rus'2000 (R2K) index confirmed the floor-spike in the previous week, with gains of 4%. The first level of soft resistance is 81/82, where the 10MA is lurking. It will be very difficult to get above 83. Underlying MACD cycle remains in negative territory, but its now starting to tick higher.
Nasdaq Comp
The powerful tech' sector has seemingly found support at the 100 week MA. This weeks 4% gain confirmed the floor-spike, and we're fighting back higher. However, it will be difficult to break above 3000, which is a little over 1% higher.
In terms of the MACD cycle, we're certainly pretty low, so this bounce is very understandable.
Dow
The big Dow'30 managed to claw its way back to close the week over 13k. This is probably the bulls biggest achievement, and the Dow is now set to test the declining 10 MA - which at the Monday open, will probably be around 150pts higher.
It is going to be VERY difficult for the Dow to break over 13200/300.
NYSE Comp
With the near 4% bounce, the master index - having not declined as much as the other indexes in recent weeks, is now already back above the 10 MA.
From a MACD cycle perspective, the NYSE Comp' could even flip to a positive cycle in early December. For the bulls, this is one of the most bullish charts out there.
SP'500
We're now 66pts higher than the low from last Friday. That is certainly a very impressive bounce, and the style in which we closed the week was certainly bullish for early next week.
There is significant resistance, and key Fib' retracement levels around sp'1410/25.
It will be severely difficult for the sp' to put in any closes in the 1430s. Lets be clear, if we do somehow close in the 1440s, it will probably mean the old 'market madness' is back, and we'll break to new index highs.
A break of the 1343 low, would confirm that this bounce was indeed a wave'2, and everything before that was a wave'1. By default, a wave'3 as such should at least test the June 1266 low, if not take it out - as the monthly charts (which are still rolling over) suggest.
Transports
The tranny remains trapped in the twilight zone. We are still waiting for a clear break, whether its down to 4500, or over 5400. It can't stay in the current range forever.
Summary
So, last Fridays spiky low - which started with that 11am mini hyper-ramp (remember that?), was confirmed with this weeks 4% gain. Partly, it was enhanced due to the 'holiday reversal' issue, which many have recognised, and certainly, I was very concerned about it, and hence why I sat the entire week out.
The 4% bounce is certainly the kind of thing that has again sent some of the bears into despair, and also some of the permabulls into a new bout of mild hysteria.
Looking ahead
I remain holding to all original targets that I set at the end of October. I'm seeking a wave'2 bounce, that will max out somewhere around sp'1410/25. The difficult issue is how long do we churn sideways before the next wave lower.
sp'daily4 - original outlook from October
I am uncertain of the time issue. The seasonal 'Santa rally' factor may delay the next wave'3 decline until January, but we have the massive issue of the fiscal cliff, and the underlying econ-data which is generally suggesting the threat of a US recession.
So, I will hold to the original outlook, but as ever, be mindful that even if we are going to get a major move lower into the low 1200s, that Santa may delay it until January.
sp'daily3 - news to come
We have just five trading weeks left of the year, I'm sure they will be pretty busy, and hopefully at least reasonably entertaining. I will return on Monday.
Good wishes from a rainy London city.