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Technical Analysis: A Market on the Brink

An interesting juncture for the stock market here. The Dow (first chart below) closed just above its November closing low of 7552.29 for a second day.

With the Transports (second chart) already below that same level, a Dow close of just a few points lower could signal the start of another leg down in the bear market, although Dow Theory (the Transports and Industrials moving together determine the market's major trend) has been firmly on a sell signal since late September.

It'll be quite a feat if the Dow can avoid a new closing low. If it is going to succeed, the S&P 500 (third chart) will need to get back above 804. The next support for the S&P is 741-752, its November intraday and closing lows.

The Nasdaq (fourth chart) is barely holding 1460 support here; 1434 and 1400 are next below that. 1500 and 1537 are tough levels to the upside.

Paul Shread is a Chartered Market Technician (CMT) and member of the Market Technicians Association. He is a co-author of an upcoming book on Dow Theory from W&A Publishing.