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Technical Analysis: 90% Upside Day

The NYSE put in a 90% upside day today - that's potentially bullish, since it follows a 90% downside day by just five trading days. However, we never got a good washout on the downside, and NYSE new highs are actually fewer in number than they were at last week's lows, and new lows increased on both exchanges today, so there are a number of indicators that are not lining up as we would prefer. New highs and lows will have to improve for this rally to have staying power. Also, there is a widespread view that the market will rally just as it did when the Gulf War started in 1991 - be careful of what everyone knows, since it's usually priced in. Those substantial reservations aside, today's NYSE action appears bullish until proven otherwise. That said, there is major resistance dead ahead on the Dow, S&P and Nasdaq (see charts below), and all indexes are very overbought on short-term stochastics. On the Dow, major resistance is 8159 and 8242, and support is 8076 and 8000. For the S&P, 865 and 870 are major resistance, and 850-853 is support. On the Nasdaq, resistance is 1400-1420, and support is 1350-1360.

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