Technical Analysis: Indexes Hang On

Volume was light again today, and no technical damage was done to the downside, so more upside remains possible. It is interesting to note, however, that stochastics on all the indexes have reached overbought levels (see charts below), which could limit upside. The Dow (first chart below) continues to look like a retracement after a breakdown from a broadening pattern. Support is 8000, 7900 and 7775, and resistance is 8076 and 8150-8250. The S&P (second chart) has support at 837 and 830, and resistance at 855 and 865. The Nasdaq (third chart) has support at 1320 and 1300, and resistance at 1346-1349 and 1360-1363. The semis (fourth chart) are retesting the neckline of a head-and-shoulders top. Finally, the QQQ, the Nasdaq 100 tracking stock, continues to hang around Max-Pain at 25 with options expiry coming up. With calls outnumbering puts by 25,000 at that level, there is room to go lower in the next couple of days.

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