Another week trading within a very small range, we see the XJO trading sideways holding ground around the important 5200ish level.
Over the next week, look for small falls on the XJO down towards the rising trend line, this opinion is based on both the CCI and MACD which are just about to cross to the downside, we should see the market retesting the current trend at around the 5100 level.
This level is important as it will show how strong the overall market is, should the XJO bounce off the rising trend line, we could easily see the market rising towards the 5500 level within a few months. Failure at 5100 will see us fall quickly back towards the 4900 level.
A Shift from Financials Technically
The financial sector has led the charge over the last few months. In the last 2 weeks we have seen a noticeable drop off in strength, partly because of the dividend pressures in May. Nonetheless the MACD has signalled a move to the short side, with the CCI about to do the same. Notice the chart moving towards a triangle shape with the centre being support at the 5700ish level.
The general rule with triangles is that the chart will not get to the corner, it will punch out one side or the other. Should the finance sector index drop through the current support you could easily see the market test the rising trend line, then the support at 5550 level then ultimately it will retest the underlying trend around 5100.
It may be time to look away from financials into other sectors.