If there’s one thing that could undo this rally, it’s weakness in the financials. If you were watching the BKX (first chart below), the banking index, you wouldn’t have been surprised when today’s rally came unglued. The banks were red by 10:05 this morning, while the Nasdaq was still above 1800. Watch those financials: that’s a nasty-looking head and shoulders top heading into September, historically the weakest month of the year, and if 850 support goes, September could live up to its reputation. The S&P 500 (second chart), heavily weighted by financials, failed at 1010 resistance and never challenged 1015. Support is 987-992 and 980. The Nasdaq (third chart) didn’t like the rarified air of 1800. 1776 is first resistance, and 1757-1760, 1740-1747 and 1730 are support. The Dow (fourth chart) gave up its March trendline and is also threatening 9352-9361 support. 9250 and 9185 are next supports, and 9470-9500 is major resistance.
