Technical Analysis: Consolidating At The Highs Or Topping Out?

A lot of mixed signals here, so we’ll start with two: charts and sentiment. The Dow and S&P (first four charts below) may be forming bearish broadening patterns in the intraday charts the last three days. On the other hand, sentiment is somewhat supportive here, with the VIX (fifth chart), the options volatility index, up on an up day, and a whole lot of puts at 26 and below on the QQQ, the Nasdaq 100 tracking stock. On the other hand, there is a lot of chart resistance just overhead – along with a lot of calls – so the market is trapped between too much bearishness to the downside and overhead resistance and supply to the upside. The broadening patterns suggest this could resolve to the downside. The Dow and S&P continued to stall at the critical 8250-8300 and 875-880 resistance levels. Above that, the 200-day moving averages at 8365 and 884 are next, and above those levels the recent highs at 8522 and 895. 8150 and 868 are support. The Nasdaq (sixth chart) is putting in a decent-looking reversal here. 1368-1375 and 1360 are support, and 1400-1425 is resistance.

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