Technical Analysis: Bulls Hang By A Thread

The bullish case is hanging by a thread here, if not already broken. The Nasdaq (first chart below) closed below its 200-day moving average for the first time since March 2003. About the only plus was that the breakdown occurred on declining volume. We got a big jump in the equity put-call ratio at the end of the day, but it was AWOL until then, so we’ll call that high reading suspect. The market needs to turn up – and fast – to fix that technical damage. At least Monday will be the first of a new month, with institutional inflows coming in, so we could get a bounce. And then the Fed will likely change its bias on Tuesday – should make for a lively day. There’s no calling that Nasdaq chart positive – the index formed a bearish “three black crows” pattern the last three days. That could make for a bounce – perhaps to 1973 resistance – before turning back down. First resistance is 1933-1940. The March lows at 1897-1900 are obvious support, but if the January-March decline is duplicated, the eventual target could be 1822. The S&P (second chart) has support at 1098-1103, and 1087-1091. If those levels don’t hold, the target could be 1075. Resistance is 1111, 1115-1116, 1120-1122, 1126 and 1130. The Dow (third chart) has support at 10,217, 10,182, 10,108 and 10,000-10,008, and resistance is 10,300-10,333 and 10,390-10,400. The eventual target on the Dow could be 9825 if 10,000 doesn’t hold. Finally, the one unquestionably bearish chart out there: that sure looks like a head and shoulders top on the banks (fourth chart).