Technicals

Dow Looking To Test 10,000 With Break of Trendline Support

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 has sharply fallen after breaking below trend line support; the exaggerated move appears vulnerable for a retrace. However, a test of 10,000 appears likely with a break below exposing 9,679-11/2 low.

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 has broken below trend line support where it is now coming up against former congestion at 1,085. We are also see the convergence of a short-term trend line which could lead to a retrace. A break below exposes 1,029-11/2 low.

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 also seen its losses accelerate with a break below trend line support. Support could come at 2,113-11/27 low where we are also seeing a short-term trend converge.