BOTH VERSIONS OF S&P 500 TRY TO HOLD SUPPORT

S$P 500 TESTS TRENDLINE SUPPORT AND 200-DAY AVERAGE... Last week's message suggested that the S&P 500 was headed for a test of its 200-day moving average (red line) and a rising trendline drawn under its October/March lows.   Chart 1 shows that test taking place today.   A strong September job report this morning pushed stock prices lower and bond yields to another 16 year high.   An afternoon rebound in stocks, however, may be suggesting that this morning's test of support has been successful.   In addition, its 14-day RSI line in the upper box appears to be bouncing from oversold territory near 30.  The 10-Year Treasury jumped to 4.88% before backing off in afternoon trading.   That may have also contributed to today's stock buying.   The TNX is moving close to its next upside target near 5% and is looking overbought.

ANOTHER VERSION OF SPX TESTS SUPPORT... Chart 2 shows the S&P 500 Equal Weighted Index trying to bounce off potential chart support at its March low.   The index needs to find support along the lower trendline in order to prevent a serious chart breakdown.    Also encouraging is the fact that the 14-day RSI line in the upper box is bouncing from oversold territory below 30 (black circle).   What happens to that index has a big impact on the more traditional S&P 500 Index.

The chart below shows the equal weighted version of the S&P 500 failing a test of its yearly high during the summer (red arrow) which led to an August/September selloff in both indexes.     Which suggests that a successful test of its lower trendline should have a positive impact on both.   The fact that both indexes are testing important support lines at the same time (while in an oversold condition) also increases the odds for a stronger fourth quarter in both.