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Technical Analysis: Bears Still In Charge

We noted yesterday that the lack of buying conviction was a problem for the stock market, but we didn't expect the mortgage rescue gains to evaporate this fast.

Today marked the third 90% downside volume day in this range sine June 26 — that's a lot of selling pressure without much of a movement in price, which suggests that downside momentum may be waning. But until we get some confirmation of a bottom — a 90% upside day would be ideal — the risk remains to the downside.

The S&P (first chart below) is now back down in the range of its 1200-1217 lows; if that goes, 1155-1163 should be very strong support. To the upside, 1242, 1250, 1267 and 1276 are resistance.

The Dow (second chart) has support at 11,200, 11,125, 11,000 and 10,670-10,827. Upside hurdles are 11,415-11,445.

After outperforming since March, the Nasdaq (third chart) is leading the way lower here. If 2200 goes, 2150-2175 is critical support. 2250, 2285, 2303, 2325 and 2345 are resistance.

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