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Technical Analysis: Has The Rally Started?

Today may have marked the start of seasonal strength, but the evidence so far is mixed. The reversal in NYSE new highs-new lows was very positive, but an 80% upside volume day would have been even better. And the relative lack of participation by tech and chip stocks was a negative. The Dow, Nasdaq and S&P (see first three charts below) all struggled at their 50-day moving averages today. The Dow and S&P will break their December downtrends on any move up on Monday. The Nasdaq faces the same resistance at 1370. 1380-1390 and 1400-1410 are next resistance zones after that, and 1347 is critical support. Next resistance on the Dow is 8550 and then 8675. 8325 is critical support. The S&P has resistance at 900, 913-916 and 925, and 880 is critical support. The SOX (fourth chart), the semiconductor index, faces tough resistance at 307-311.

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