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Technical Analysis: Markets Settle Down

Have we finally purged fear about the credit markets? The market finally settled down today, but we wouldn't rule out a low-volume retest of last week's low at some point, perhaps a higher low. Certainly after the run-up off Thursday's low, some sort of consolidation would be healthy. Also important will be the quality of any rally from here — failure to make significant headway over the next month or so could open the possibility of another leg down in October.

The Dow (first chart below) faces tough — and important — resistance at 13,200-13,300, and support is 13,000 and 12,850-12,900. The S&P (second chart) faces tough first resistance at 1455, with 1470 above that. 1427-1429 and 1416 are support. The Nasdaq (third chart) faces tough first resistance at 2525-2531, and support is 2500, 2487 and 2460. Bond bulls (fourth chart) don't seem to be quite done yet.

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