Technical Analysis: Be Careful Out There

Note: There will be no Technical Analysis on Wednesday, Nov. 26, or Friday, Nov. 28. It will return Monday, Dec. 1. Happy Holidays.

With a market nearing overbought levels, a very low equity put-call ratio, and the VIX, the options volatility index (first chart below), setting a new multi-year low, danger has increased for longs. The next few days are historically a very positive period, but sentiment suggests that the bulk of the holiday rally may have already occurred. The rest, pardon the pun, is gravy. The Nasdaq (second chart below) formed a bearish shooting star today after hitting resistance at a downtrend line. Resistance is 1956, 1960, 1967-1970 and 1992, and support is 1940, 1930 and 1915-1923. The S&P (third chart) has resistance at 1058-1060, 1063 and 1070, and support at 1049-1050, 1043, 1040, 1038 and 1031. The Dow (fourth chart) has resistance at 9800, 9850, 9900 and 10,008, and support at 9700, 9650-9670 and 9585-9600. The Transports (fifth chart), meanwhile, are making a good stab at some important resistance here. One to keep an eye on.