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Technical Analysis: Bulls Make a Dent

Another strong showing by the bulls today, but they once again failed to be convincing. Back-to-back 80% upside volume days would have been bullish, but the NYSE and Nasdaq could only register 72% today after yesterday's near-90% upside volume on the NYSE. We give the bulls the benefit of the doubt for the next month or so, but some cracks are beginning to appear. The latest is this week's Investors Intelligence survey, which showed a 4 1/2-point jump in bulls to 56.7%, nearing the 60% danger zone, the latest sign that the traditional "Fall fall" could be set for its first appearance in five years. For now, though, the indexes continue to chew through resistance.

The S&P (first chart below) has important first support at 1516-1518, and resistance is 1527, 1532 and 1540. The Nasdaq (second chart) faces resistance at 2605, 2620 and 2626, and support is 2593, today's intraday low, and 2582-2584, today's opening gap. The Dow (third chart) ran into a major trendline today. That line will be at about 13,620 for tomorrow, and 13,512 and 13,480 are support. Now that it's hit neutral, the 10-year yield (fourth chart) can't seem to decide where to go next.

Paul Shread is a Chartered Market Technician (CMT) and member of the Market Technicians Association