Technical Analysis: Another Day, Another Breakout

This rally has continued without a breather despite overbought conditions on all indexes – amazing strength indeed. The Dow and S&P (first two charts below) closed above their 200-day moving averages today, yet another breakout for the bulls. Those averages, at 8436 and 891, are first support, and 8250-8300 and 870-875 are now critical support. Resistance is 8560-8580 on the Dow and 905-906 on the S&P; above those levels, the January highs look likely. Speaking of which, the Nasdaq 100 (third chart) formed a bearish “hanging man” candlestick at its January high today. A down day on Monday for the Nasdaq and Nasdaq 100 (fourth chart) would look bearish. Resistance is 1104-1112 on the Nasdaq 100, and 1425, 1440 and 1467 on the Nasdaq. Support is 1400 and 1380 on the Nasdaq. The equity put-call ratio closed at a bearish .42 today, showing significant complacency. Max-Pain, the level at which most options expire worthless, did not work out this month, but it’s shaping up to be bearish for April: Max-Pain for the QQQ is at 25 for next month, and could be lower than 23 by expiry. The QQQ, the Nasdaq 100 tracking stock, closed at 27.17 today. On the other hand, new highs-new lows did improve today (including a new all-time high for Dow component 3M), and there is volume behind this move, so more upside is not out of the question. But what will happen when the war ends if the economy doesn’t show signs of improvement?

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