Technicals

Dow Testing Channel Support After Steep Pullback

Testing support from a steep channel, a drop below would suggest that an important top is in place at 10730.  The next level of support is 9679, then 8878.  The level that produced the January top has been significant in recent years (2004-2006), which increases the likelihood that a more important is in place.

The pace of the Dow’s decline has slowed but it remains on track to test the significant psychological level of 10,000. A break below support would expose 9,679-11/2 low but that may follow a period of consolidation.

The S&P has already broken below its channel, which reinforces the topping theme.  Just as the Dow’s January top occurred at a previously important level, so did the S&P top (see circled area).  The next level of support is 1029, then 956.  Favor the downside.

The S&P 500 decline has started to pick up steam following a brief period of consolidation sending it below former congestion at 1,085. The move below leaves support at 1,029-11/2 low.

The NASDAQ has broken below a support line drawn off of lows in July and November.  RSI divergence on the weekly plot at the January high is also bearish.  The next level of support is 2024.

The NASDAQ has also seen its losses accelerate and is now threatening rising trend line support near 2,147 which would leave  2,113-11/27 low as support. The tech laden index appears on course for an ultimate test of 2,024-11/2 low.