Technical Analysis: Momentum Turns Down
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Some mixed signals in the market today.
But we'll need some sign that momentum has turned back up to confirm a bottom. Today was a 90% downside volume day on the NYSE, suggesting that momentum has turned back down unless we can get a 90% upside day in the next week or so for an all-clear signal.
The NYSE advance-decline line (first chart below) has been outperforming even as the NYSE itself (second chart) hit a new low, which suggests that more stocks are finding support here, an eventual positive for the market as a whole. Perhaps the best-case scenario would be a retest of the Dow and S&P lows with a higher low in the A-D line.
The S&P (third chart) lost a whole lot of support at 1270 today and kept going; 1260 and 1270 are now first resistance for the bulls. The next support levels are 1234, 1215 and 1200, with 1155-1163 possible if that can't hold a level that marked the early 2004 top.
The Dow (fourth chart) faces upside resistance at 11,300 and 11,430, and the next support levels are 11,125, 11,000 and 10,670-10,827.
The Nasdaq (fifth chart) is another index accelerating to the downside. Resistance is now 2330-2350, and support is 2250, 2200 and 2150-2175.
Paul Shread is a Chartered Market Technician (CMT) and member of the Market Technicians Association.