Technicals

Dow Upside Potential Remains With Trendline Support Holding

The Dow has traded sideways / slightly up since the beginning of November.  Trading higher from the sideways consolidation favors additional upside with the next level of resistance being 10828.  Daily oscillator studies warn of a turn however (waning momentum since the summer).  Coming below the support line would be the earliest signal that the trend has reversed but a drop under 9679 is needed in order to break the series of higher lows.

The Dow continues to trade along trend line support and is now looking to target resistance at 11,000. A break above the psychological level would leave the 61.8% Fibo level of 14,198-6469. The Blue chip index has yet to test pre-Lehman levels which could be the ultimate target before a major retrace. Former resistance at 10,333-50.0% Fibo may now serve as support if we see a break below the current trendline.

The S&P is in a similar situation to the Dow in that the index has traded higher following a sideways consolidation.  A measured level at 1159 is potential resistance, which is followed by 1200 (former support).  The S&P has traded below its support line already – watch the underside of the line for resistance.  The line is at 1150 this week and increases 11 points a week (1161 next week).

The S&P 500 like the Dow continues to trade along trendline support. However, we have seen resistance at 1,150 following its break above 1,120- 50.0% Fibo of 1,576- 666. A break above the psychological level would expose 1,200.

The NASDAQ has been a beast, already rallying through its 61.8% retracement of the decline from 2862.  The next level of potential resistance is the 100% extension of 1266-1880 / 1727, at 2341.  Like the S&P, the NASDAQ is trading below its former steep support line.  This line is now probable resistance.  The line is at 2392 now and increases 26 points per week (a blow off perhaps?).

The NASDAQ has been a beast, already rallying through its 61.8% retracement of the decline from 2862.  The next level of potential resistance is the 100% extension of 1266-1880 / 1727, at 2341.  Like the S&P, the NASDAQ is trading below its former steep support line.  This line is now probable resistance.  The line is at 2392 now and increases 26 points per week (a blow off perhaps?).