Since the market began its oversold bounce a few days ago, stocks haven’t gone very far and volume has declined. This consolidation at the bottom of a big decline suggests that this correction may have another leg down. The Nasdaq (first chart below) is forming a potential bear flag the last few days. For tomorrow, 1390 is critical support, and 1420 is resistance. If that flag plays out to form, the index could be headed for 1250 or so. The Dow and S&P (second and third charts) are also consolidating at the lows, but the patterns are less clear than the Nasdaq’s. For the Dow, support is 8525, and 8495 is critical, and resistance is 8600, 8680 and 8750-8800. For the S&P, support is 900, 896, 893, 888 and 880-883 (critical), and resistance is 906, 916 and 925. Lastly, gold (not shown) broke out to a new high today. If the $330 level can hold, gold may be headed to $340-$350.
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