Technical Analysis: Bulls Show Resilience

An impressive showing by stock market bulls today — with the caveat that they also bought last month’s dismal jobs report before sending the market more than 15% lower.

Still, today was noteworthy because it included a pretty important breakout on the S&P (first chart below), which ended the day above its September downtrend line. A higher high above 896 would give added weight to the bullish case. To the downside, it would be nice to see that breakout hold — the broken downtrend line will be at about 860 on Monday and declining at roughly five points a day.

The next important levels are 930-950 to the upside and 835 and 815 to the downside. The ability to hold above Monday’s low of 815.69 all week has been impressive, but now we need to see a higher high above 896.25.

The Nasdaq (second chart) also had a pretty breakout today. Next up is 1535 and 1600-1650, and support is 1475 (and falling), 1430 and 1400.

The Dow (third chart) had a similar breakout today, but not as clean as the other indexes. A move above 8831 and 9000 could open the way to 9400, while support is 8500, 8300 and 8118-8141.

Paul Shread is a Chartered Market Technician (CMT) and member of the Market Technicians Association.