With the market firmly overbought, with stochastics above 90 on all the index charts, and all the indexes at resistance, we would not be surprised to see a pullback or consolidation soon. The Dow (first chart) is struggling at 8800 resistance; if it can close above that level, the index could be headed for its 200-day moving average at 8950. To the downside, 8700 is first support, followed by 8550-8600. The S&P (second chart) is hesitating at the 925 area; if it can clear that area with any force, it could head back to the critical resistance zone of 950-965. 920, 910 and 905 are support. The Nasdaq and Nasdaq 100 (third and fourth charts) are also hitting resistance, their 200-day moving averages and early December gaps at 1446-1449 and 1082-1088. Support on the Nasdaq is 1420-1426, 1415, 1400 and 1390. There is also one other factor that could put pressure on the market in the next 10 trading days: Max-pain, the level where most options expire worthless, on the Nasdaq 100 tracking stock (QQQ) is between 25 and 26; the QQQ closed at 26.65 today. Finally, sentiment is wobbly, with the CBOE equity-only put-call ratio hovering around .50, with yesterday’s close at .48. In short, not a lot to support a big advance from here, unless skepticism makes a comeback.
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