Technical Analysis: Bulls Score A Victory

A solid win for the bulls today, with some help no doubt coming from first-of-the-month inflows. That said, investors have been buying bad news for the last month or so, so today fits the pattern. The Nasdaq (first chart below) closed right at a downtrend line today. Above that, resistance is 2315 and 2328-2333. Support is 2290 and 2280. The S&P (second chart) faces tough resistance at 1286-1290 and 1295, and support is 1277 and 1270-1275. The Dow (third chart) faces resistance at 10,967-11,000 and 11,070, and support is 10,900-10,920, 10,855, 10,800 and 10,760. Long bond yields (fourth chart) continue to flash warning signs; at some point that negative divergence will likely hurt stocks. A quick backtest: buying the S&P above its 30-day low while long yields are above their 30-day lows dramatically underperforms buying and holding the S&P.

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