Technical Analysis: Dojis, Dojis Everywhere
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Looking over the charts from this week, the most striking feature is that the indexes have barely recovered half of Monday's big decline. With the indexes forming possible bear flags or pennants, that suggests to us that there may be at least one more leg down to the correction. All the indexes had dojis today, unchanged candlesticks that reflect indecision. We'll see what traders do when they return from the long holiday weekend on Tuesday. The Nasdaq (see first chart below) has critical support at 1498-1499, and resistance is 1521 and 1530-1534. The Dow (second chart) has support at 8590, 8522-8530 and 8500. Resistance is 8650, 8750 and 8800-8830. The S&P (third chart) has support at 932 and 924-925, and 935-940 is resistance. The banks (fourth chart) have the clearest bear flag of all. The banks may be under pressure because of a House plan to create a secondary banking system not regulated by the Federal Reserve. A dumb idea, frankly, that hopefully the Senate will kill.
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