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Technical Analysis: Stocks Hesitate

Monday is the first day of a new month and mutual fund year, so there could be another day or two of upside bias here as new money is put to work. However, the market looks a lot like it did when it topped out in mid-October, so a period of downside or consolidation wouldn't surprise us next month. Historically, when the third quarter has been strong, as this one was, the fourth quarter has tended to be choppy or down, so a month or two of consolidation might be in order. The Nasdaq (first chart below) faces resistance at 1967, and has support at 1915-1920. The S&P (second chart) has resistance at 1054 and 1070, and 1035-1040 is support. The Dow (third chart) has resistance at 9850-9900, and support at 9700. Ignore the very high equity put-call ratio today. About 171,000 of those puts was a single January QQQ trade. Still, the ratio has been higher than usual the last couple of days, so we have to consider that a supportive factor. On the other hand, a big drop in new highs today on a flat day was a negative; the internals remain shaky.