S&P 500: 'Bull Trap' Prevails as Recent Challenge Fails

Published 02/09/2025, 11:11 PM
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We are two-for-two for the S&P 500 pushing beyond 6,100 resistance - this week was nearly an exact repeat of last week - just as things looked ready to push on, sellers returned.

Supporting technicals are net bullish, which leaves just price to do its thing. What happens at converged 20-day/50-day MAs will be important, because there can only be one winner here.SPX Daily Chart

The Russell 2000 (IWM) doesn't have a 'bull trap' to contend with, but it does have its 50-day MA to overcome.

And like with the S&P, it only found rejection at the moving average on higher volume distribution. Technicals are mixed; bullish, with the exception of On-Balance-Volume.IWM Daily Chart

Nasdaq action was similar to the S&P, except it's not challenging highs. There was a clear trend break in December, but since then, the index has been moving sideways.

A break of 18,700 level results in a bear trend, and 20,100 is the switch to a bull trend. If you wanted a hint as to what comes next, Friday's volume ranked as distribution.COMPQ Daily Chart

The Dow Industrial Average is caught a little in the middle with a fresh trend break. There was a trend break in December, but then the index came back to challenge all-time highs. However, it's again drifting into a new trend break.Dow Jones Daily Chart

Bears are likely to be in control early next week, but we won't see any trend shift for a while, at least until markets clear their trading ranges. The financial media will focus on the noise, but it will be a few weeks before we know the true picture.

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