The SOX, the semiconductor index (first chart below), formed the bearish “three black crows” today and could also be forming a head and shoulders top. The index could bounce as high as 320 before turning back down, but it appears headed for a bout with the critical 285 level. Below 285, new lows would become likely for the index. The Nasdaq (second chart) gapped over a lot of support today. 1391, 1400 and 1412-1414 are resistance, and 1330 is critical support. The Dow and S&P (third and fourth charts) could also put in head and shoulders tops with closes below 8250 and 875. Supports are 8560 and 8500 on the Dow and 900 and 890-893 on the S&P. Resistance is 8700 and 8750-8800 on the Dow and 915 and 925 on the S&P. Stochastics on the SOX are oversold enough for a bounce, but the other indexes still have some more downside room until stochastics get down to the single digits. Some potential downside targets if the December decline is duplicated from the January 13 highs: 8068 on the Dow; 850 on the S&P; and 1273 on the Nasdaq.
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