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Technical Analysis: Major Resistance Looms

The Dow and Nasdaq (first four charts below) are closing in on their 2002 peaks of 10,670 and 2099, and the S&P (charts five and six) isn't too far from its 2002 peak of 1073-1077. Spots to look for a breather - if nothing else, those are areas everyone is watching, and some will probably be happy for a chance to sell there. That said, the market hasn't paused despite very overbought conditions the last couple of weeks, and with January a historically positive month, February-March may be a better time to look for a larger correction. 2050-2056 is first resistance on the Nasdaq, and 2025-2030, 2020, 2010 and 2000 are support. The Dow faces resistance at 10,670, and support is 10,500, 10,450, 10,384-10,400, and 10,350. The S&P faces resistance at 1125, 1146 and 1170-1177, and support is 1110-1112 and 1105-1107 and 1100-1102. And finally, a look at an old favorite of ours: Ken Lee's Trouncing the Dow strategy. The system, which invests in undervalued Dow stocks each year, returned an average of about 20% a year during the bear market, and did 56% last year. This year's picks are troubled AT&T , GE , Home Depot , Johnson and Johnson and Wal-Mart . As always, don't put all your money into just a handful of stocks, but the above picks are worth a closer look as possible core holdings for the year ahead.