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Technical Analysis: A Bear Hug For The Nasdaq

The Nasdaq and Nasdaq 100 (first two charts below) both had bearish engulfing candlesticks today, gapping above yesterday's candlesticks and then closing below them, suggesting the possibility for more downside tomorrow. However, stochastics on both charts are closing in on oversold levels, so the downside may be limited for now. 1050 on the NDX is a big support level, and the Nasdaq could find support at 1400. If those levels break, 1020 and 1367-1380 could come into play. Resistance is 1420-1426 and 1446-1449 on the Nasdaq, and 1065 and 1083-1088 on the NDX. The S&P (third chart) has important support at 900 and resistance at 911 and 925. The Dow (fourth chart) has support at 8500-8550 and 8400, and resistance can be found every 50 points between 8650 and 8800. The Dow had a negative +DI/-DI crossover today, showing an increase in selling pressure in the blue chips. The unemployment report will be the big news in the morning, and judging from the steady improvement in the weekly jobless claims, it could be a relatively positive report. The equity-only put-call ratio was not as supportive today, closing at .70, but the VIX (fifth chart), the options volatility index, has shown a nice rise during the market's decline, so there is some fear out there.

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