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Technical Analysis: Five and Counting

Stocks are enduring their most concentrated panic selling since October 1978 by our count, when they put in five 90% downside volume days in a single month. Things may look dark, but we're a 90% upside day away from potentially cementing a solid bottom, per the work of Paul Desmond of Lowry's Reports. Seasonality is still negative for two more months, but other than that, the bulls have plenty to work with on the sentiment side of the equation.

The S&P (first chart below) has next support at 1410 and 1400, and the 200-day average at 1454 is now first resistance. The Nasdaq (second chart) closed right on its 200-day average here. Below that is the 2460-2470 support zone, while 2550, 2576 and 2590 are resistance. The Dow (third chart) has major support at 13,000 and 12,800, and 13,200-13,300 is once again resistance. The 10-year yield (fourth chart) is slowing down here despite new lows in the indexes, which suggests that the flight-to-quality trade is running out of steam.

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