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Technical Analysis: A Mixed Picture

Internals held up nicely today, and volume declined, so we have a market that holds together on down days but doesn't have enough broad-based buying on up days to sustain a rally. Which side will win? The Nasdaq (first chart below) has a very clear trading range between 1598 and 1686; whichever way that breaks should be worth a strong move. First resistance is 1653, and first support - an important one - is 1607-1609. The S&P (second and third charts) could be forming a head-and-shoulders top here. 973, 969 and 963 are important supports, and 990-992 is resistance. The Dow (third chart) has support at 8931-8945 and 8800, and 9100-9110 is resistance. Once again, there was excessive put buying today, but so much of it was on the index side that it was by no means "dumb money" shorting today. And finally, a warning sign worth noting: the American Association of Individual Investors survey hit a level this week - 70% bulls to only 9% bears - seen in the last 16 years only at the Dow's 2000 and 1987 peaks. The Nasdaq remains on an intermediate sell signal, but once again the blue chips failed to confirm that signal.

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