Technical Analysis: Investors Buy Every Dip

Price continued higher today, as traders continue to buy every dip, but the internals remain uninspiring, with a dearth of 80% upside volume days the last week and a half. That selective buying makes the market vulnerable to a correction, should investors ever become in a mood to sell. The indexes may still be forming bear flags on the intraday charts (see the Nasdaq intraday chart, first chart below), but today’s higher volume makes that less likely, and a good upside move in the Nasdaq tomorrow could take out that upper trendline. The 8931-9000 range on the Dow (second chart below) is the first big support for the market, and our major supports are 1540-1550 on the Nasdaq and 945-948 on the S&P below that (charts three and four). To the upside, resistance is 9262 and 9400-9500 on the Dow; 1000-1007, 1020-1030 and 1056 on the S&P; and 1666-1719 on the Nasdaq.

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