Technical Analysis: Bears Stay In Charge
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The U.S. dollar has stopped falling, oil is going down and financial stocks are outperforming, yet the stock market continues to fall, as the focus has shifted from the credit crunch to inflation and recession overnight. In short, the bulls just can't catch a break here.
The major indexes (see charts below) were less than inspiring today, looking more like breakaway gaps that could see some follow-through selling. A year-end rally next week could provide some relief, but weakness at a seasonally strong time of year in the face of Fed rate cuts sounds a little more like 2000-2001 than we'd prefer.
The S&P has support here at 1445, with 1440, 1428-1432, 1416 and 1406 below that. To the upside, 1465-1468 would be a good start.
The Dow has support at 13,000-13,020, and resistance is 13,266-13,320.
Paul Shread is a Chartered Market Technician (CMT) and member of the Market Technicians Association.