It's a worrying time for longer-term investors as we approach that time of the year when the old adage of 'sell in May and go away' comes to mind as all three of the major U.S. indices struggle to maintain the longer-term bullish momentum.
Of the three – Dow, NASDAQ, and the S&P 500 – they all exhibit similar technical issues. However, it is the NQ Emini daily chart that is the focus here. The problematical level that sits at the psychological 14,000 level continues to present a formidable barrier.
During April this has been tested several times, more recently on both Monday and yesterday. It was the stumbling block earlier in the month, when the index sold off sharply only for it to recover. What is perhaps of more concern is the lack of buying interest, with volume falling over the last few days on those which closed higher.
Note the last two green candles. While price and volume are in agreement, the narrowing of the spread on the second day signals a weakness that has duly been delivered, yesterday and thus far today.
Despite the old adage, I believe the medium-term outlook is still bullish for risk assets and not least for commodities, particularly copper, softs and lumber. For the NQ in particular, it is a question of breaching and holding above the 14,000 resistance level. Once through, a strong platform of support will be in place to propel the index higher.