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Technical Analysis: The New Year Starts With Breakdowns

The bearish rising wedges that we warned you about on Dec. 23 broke down today; now we'll see how much strength the bulls have in them. The Nasdaq (first chart below) needs to get back above 2160 quick to reverse its breakdown. Support is 2150, 2140 and 2130. The S&P 500 (second chart) also broke down today. Resistance is way up at 1218, and support is 1198-1200, 1190 and 1185. The Dow (third chart) broke its October uptrend today. Support is at 10,700 and 10,600-10,650 (10,640), and resistance is 10,825 and 10,867. And finally, time once again for our annual look at one of our favorite strategies, Ken Lee's Trouncing the Dow approach, which selects undervalued stocks and holds them for the year ahead. The 2004 list returned 13%, beating the major averages. This year's picks are Alcoa , American International Group , Pfizer and Wal-Mart . Once again, good candidates for core holdings for the year ahead.