August has been a month highlighting US large-cap stock resilience. The robust artificial intelligence led rally in US stocks ran into headwinds during August. But the month is ending with the major US indexes showing signs of durability.
Above we show the monthly charts of the US30, SPX500 and NAS100.
Firstly, the respective August candlestick for each index (red arrows) has a positive bias. The candles show that there was an initial sell down during the month. However, the bears lose control at the month lows and the bulls take over control. Subsequently, the bulls push price back up leaving a relatively long lower shadow for the individual August candles.
Another positive aspect is that all three indexes are trading in their bullish channel between the upper blue and red bands. The longer the candlesticks maintain in this channel, the greater the likelihood of further bullish consolidation.
Finally, the stochastic, which is a measure of momentum, finds itself above 80 for all three indexes (blue arrows). If they maintain in the upper quintile, the US30, SPX500, and NAS100 will have a long-term underlying bullish momentum. This, in turn, will tend to be index supportive.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.