Technicals

Dow Threatens 10,000 Exposing Downside Risks

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 Dow is threatening 10,000 and given the sharp bearish decline from yesterday there could be sufficient momentum to push the blue chip index below the monumental psychological level. A break below support would expose 9,721-38.2% Fibo of 8,087-10,719 followed by 9,679-11/2 low.

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 has cleared former congestion putting it on track to test support at 1,043-38.2% Fibo of 869-1,150 with the 1,029-11/2 low as the next barrier.

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 broken below the rising trend line and is looking to test support at 2,113-11/27 low followed by 2,024-11/2 low.