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Technical Analysis: A Lot Of Volume For A Modest Gain

The market seems to be spending a lot of energy making only modest progress, given today's nearly 2 billion-share day on the Nasdaq. Insider selling and new issues have picked up, according to TrimTabs, so liquidity is turning negative. With sentiment getting pretty stretched (the American Association of Individual Investors came in at 63-16 bulls-bears this week), perhaps the market is nearing a top. With major resistance just ahead on the Nasdaq and S&P 500 (see first four charts below), a correction, perhaps a strong one, is becoming more likely. Investors continue to buy bad, if not dismal news, which is a plus, but the economy needs to begin to improve or hopes for a rebound will be dashed. Resistance is 948-950 and 955-957 on the S&P, and support is 935-940 and 925. The Nasdaq faces resistance at 1555-1560 and 1600, and support is 1540 and 1521. The Dow (fifth chart) has resistance at 8750 and 8800, and support is 8670, 8522-8530, and 8500. The Transports (sixth chart) are beginning to turn, which is a negative because they've been genuine leaders in this rally.

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