Technical Analysis: Breakouts

Nice breakouts on the major indexes today (see first three charts below), with the S&P finally clearing the 1015 area. Looking at just the S&P chart, we have a breakout of a 53-point trading range at 1015, which gives the index upside potential to 1068. 1015 is now critical support. The Dow has support at 9470-9500 and 9352-9361, and has upside potential to 9700-9800. It’s hard to find much resistance on the Nasdaq at this point until 1900-1940, and today’s move leaves support at 1814. Even the banks (charts four and five) could undo some technical damage if they head higher from here. About the only warning sign is that the market is short-term overbought at the start of the weakest month of the year, the only one with a negative return on the Dow and S&P for the last 75-100 years.

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