Technicals

Dow Finds Support at 200-Day SMA

The Dow’s direction remains uncertain following consecutive days of extreme volatility. In the current environment technical levels can lose their predictive power and must be taken in the context of the broader trends. The bounce from 10,000 validates the level as a formidable support level and if bearish momentum continues, then we would look for the psychological barrier to be tested again. A break below exposes 9,429-38.2% Fibo of 6,470-11,258. The 200-Day SMA at 10,192 is a notable technical level and if price action remains above the level then a resumption of the bullish trend is likely.

The S&P 500 has also seen price action dictated by broader trends and is also seeing support from the 200-Day SMA at 1,095. A break below leaves the psychological barrier of 1,050 as the next barrier where we the February 10^th low of 1,044 may add reinforcement. Price action remaining above the 200-DQay SMA keeps the longer-term bullish trend intact.

The NASDAQ’s bounce from the 200-Day SMA increases its importance as a target level.  A break below the barrier would exposes 2,050-38.2% Fibo of 1,265-2,535. Resistance could come at the former longer-term support trend line. A break back above the level could signal that the bullish trend is continuing.

Dow Could See Losses Slowed By Trend Line Support

The Dow continues to stumble after failing to break above resistance at 11,240-61.8% Fibo of 14,167-6,470; the technical level is near pre-Lehman levels which may require further evidence of a sustainable recovery before an ultimate break above.  A break below a short-term trend line has left longer-term support as the next barrier. A break below the level opens the door or a test of 10,000.

The S&P 500 has also seen its losses accelerate following failure ahead of major resistance at 1,228-61.8% of 1,576-666. The broader index is looking to test a longer-term trend line which could provide support. However, a break below could expose support at 1,050.

The NASDAQ’s has seen losses begin to accelerate after failing to threaten major resistance at 2,549- the June 5, 2008 high. The tech laden index has erased the majority of it’s loses from the credit crisis which could make it more susceptible to a large reversal. We are seeing brief support at 2,400 where we see former consolidation. The 38.2% Fibo of 2,100-2,536 at 2,318 is the next barrier with the longer-term trend line possessing the greatest potential to stop recent losses.

Dow Turned Away By Fibo Resistance

The Dow stumbled after failing to break above resistance at 11,240-61.8% Fibo of 14,167-6,470; the technical level is near pre-Lehman levels which may require further evidence of a sustainable recovery before an ultimate break above. . A break below the rising support line has now opened the door for an extended move lower.

The S&P 500 has turned lower before testing major resistance at 1,228-61.8% of 1,576-666. The current break below trend line support could be a sign that downside risks are increasing.

The NASDAQ’s like its counterparts has failed to threaten major resistance at 2,549- the June 5, 2008 high. The tech laden index has erased the majority of it’s loses from the credit crisis which could make it more susceptible to a large reversal. Support could come at 2,400 where we saw brief consolidation.

Dow and S&P Facing Formidable Golden Ratio

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.

Short-Term Technical Outlook

The Dow is looking to re-test resistance at 11,240-61.8% Fibo of 14,167-6,470, the technical level is near pre-Lehman levels which helps make a case that the current rally could stall at the level. A break below the rising support line could open the door for an extended move lower. Support could come at 10,650 the 38.2% retracement of 983-11,154.Howvger, a break above exposes 11,729-8/11/08 high

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.

Short-Term Technical Outlook

The S&P 500 like the Dow is looking to test major resistance at 1,228-61.8% of 1,576-666. The golden ratio is a very formidable technical indicator and failure at the level could lead to a reversal. Watch for a break below trend line support as a sign that downside risks are increasing. However, unlike the Dow the broader index remains below pre-Lehman levels which could leave upside potential above 1,300.

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.  

Short-Term Technical Outlook

The NASDAQ’s break above 2,473- the August 15, 2008 high has left 2,549- the June 5, 2008 high as the next major barrier. Failure at the level could lead to a significant reversal.

Dow Threatening Trendline Support, Increasing 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 saw its gains slowed before a test of resistance at 11,240-61.8% Fibo of 14,167-6,470, the technical level is near pre-Lehman levels which add to the case that the current rally may be stalling. A break below the rising support line which is being threatened could open the door for an extended move lower. Support could come at 10,650 the 38.2% retracement of 983-11,154.

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 like the Dow has turned lower ahead of a test of major resistance at 1,228-61.8% of 1,576-666. The move back below 12,000 reinstates it as a potential barrier. The broader index is also testing trendline support and vulnerable to extended losses.

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’s break above trend line resistance and 2,473- the August 15, 2008 high was quickly retraced. We may be seeing a false breakout which could be followed by a larger retracement. Support could come at 2,400 where we see prior consolidation.

Dow Marches Higher Takes Aim At Pre-Lehman Levels

Short-Term Technical Outlook

The Dow appears poised to test resistance at 11,240-61.8% Fibo of 14,167-6,470, the technical level is near pre-Lehman levels which is where we may see the current rally stall. However, we have started to see consolidation ahead of psychological resistance at 11,000 which could also be a turning point.

The S&P 500 like the Dow is on track to test major resistance at 1,228-61.8% of 1,576-666. However, trendline resistance could slow gains with the psychological barrier of 1,200 offering another roadblock.

The NASDAQ has seen its advance slowed by trend line resistance near 2,415. However, the next major barrier is the August 15, 2008 high of 2,473 which could be tested before any major retracement.

NASDAQ Looks To Extend Gains With Little Ressitance Ahead

The Dow gains have been slowed by resistance at 10,586- 61.8% Fibo extension of 13,136-6,460. The technical level could prove formidable considering it is the golden ratio of a major decline. Downside risk are to 10,400 where we find trendline support, a break above exposes 10,750 followed by 11,000.

The S&P 500 like the Dow has broke from its short-term wedge but is facing resistance at 1,144-61.8% Fibo of 1,440-665. A break above exposes 1,175, with downside risks to 1,100.

The NASDAQ continues to set fresh yearly highs and continues to be the outperformer of the U.S. indices. However, this could make it more susceptible to a bout of risk aversion.  Possible trend line resistance at 2,415 could slow current momentum with psychological resistance at 2,400 in the way as well. The next major barrier is the August 15, 2008 high of 2,473 which could be tested before any major retracement.

Fibo Resistance May Limit Dow’s Gains

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 broke from its short-term triangle but found resistance at 10,586- 61.8% Fibo extension of 13,136-6,460. The technical level could prove formidable considering it is the golden ratio of a major decline. Downside risk are to 10,400 where we find trendline support, a break above exposes 10,750 followed by 11,000.

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 like the Dow has broke from its short-term wedge but is facing resistance at 1,144-61.8% Fibo of 1,440-665. A break above exposes 1,175, with downside risks to 1,100.

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 set a fresh yearly high of 2,335 which now leaves little in the way of solid resistance before the August 15, 2008 high of 2,473. The break of the trend lines drawn from the all-time high has seen gains accelerate which could be carried through into this week’s trading.

Dow Triangle Signals Potential Breakout

Recent Dow price action has developed a potential triangle formation which could signal the potential for a breakout.  The blue chip index appears to have breached the upper bound signaling a stronger move to the upside. However, this is a weak interpretation of the pattern which leaves us without significant conviction on the pending move. Nevertheless, a clear upward trend has emerged leaving potential to re-test 10,750.

The S&P 500 like the Dow is also in the midst of a bullish trend after finding trendline support. Look fro the continuation of the broader channel and a re-test of resistance at 1,144-61.8% Fibo.

The NASDAQ has broken resistance at 2,251-61.8% Fibo of 1,265-2,861 leaving the yearly high of 2,234as the next barrier. Continuation of the bullish trend leaves potential to 2,500.

Dow’s Hammer Candle Warns Of Reversal

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 briefly broke below 10,000 to a low of 9,835 before retracing and closing back above the psychological level. The resulting hammer candle is typically a reversal sign which could see an extension of the bullish momentum that ended the week. However, another break below support would increase downside risks and 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 like the Dow saw a significant retracement and a resulting hammer candle which is a reversal signal. The broader index found support at 1,043-38.2% Fibo of 869-1,150 which could prove to be solid support going forward. A break below exposes 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. Although not as pronounced as the other indices, the tech laden index also saw a hammer candle to end the week. So traders should watch for a short-term reversal before continuation of the broader bearish trend.

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