Technical Analysis: Nasdaq Runs Into Old Support
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The Nasdaq (first chart below) has stalled at the bottom of the 2155-2200 range that served as support for much of 2008 before the implosion of AIG and Lehman Brothers shaved some 900 points off the index.
It's impressive that the techs have gotten this far but it's also a very big test for the index, and it will be every bit as tough, if not tougher, when the Dow and S&P (charts two and three below) get there.
To the downside, the Nasdaq has support at 2060 and 2000-2015.
The S&P won't get anywhere near the same resistance levels until 1133 and then 1200. Support is 1040-1044, 1020 and 1007.
The Dow would face the same test at 10,459 and 10,683-10,827, but 10,000 has been obvious resistance for the index going all the way back to March 1999, when the blue chips first closed above that level.
Support for the Dow is 9654, 9500 and 9300.
Sentiment hasn't gotten out of hand on the bullish side, but the economic hazards are real and the market is in the weakest period of the year for the next month. Not a bad time for a little caution.
Paul Shread is a Chartered Market Technician (CMT) and member of the Market Technicians Association. He is a co-author of the book "Dow Theory Unplugged" from W&A Publishing.