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Technical Analysis: Resistance Holds Again

The S&P (first chart below) continues to face considerable resistance here in a potential topping pattern, with the weakest part of the year beginning next week. Resistance is 1306-1307 and 1310, and support is 1299 and 1294. The Nasdaq (second chart) continues to fare very well, and in fact would generate a buy signal under Gerald Appel's 10-week relative strength indicator if it can hold till the end of the week, so a plus for the bulls there. Resistance is 2190, 2200 and 2225, and support is 2163-2168. The Dow (third chart) stalled at 10,400 today, with 10,426 and 10,460 above that, and 11,330 is now critical support. Bond yields (fourth chart) continue to press deep into support. Finally, an impressive move by the NYSE advance-decline line (fifth chart), but that appears to be largely due to the bond rally, with much of the exchange made up of preferred stocks and bonds — common stock-only A/D lines are lagging here, so what appears to be a positive is actually evidence of selective buying. In summary, while the indexes appear solid and investor sentiment remains a plus, there remain a number of reasons for caution over the next six weeks.