Technical Analysis: Nasdaq Can’t Clear Its August High

A pretty ugly reversal today, but surprisingly, internals held up well under the circumstances, a positive for the bulls. Still, the rising volume on the Nasdaq is enough to qualify as a distribution day for tech stocks. One negative is that the Nasdaq (see first chart below) failed to clear its August high today, while the big-cap Nasdaq 100 (second chart) cleared its August high earlier this month. That’s a negative because it means that the soldiers are not following the generals, one more sign of hesitance on the part of buyers at current levels. The indexes all formed bearish dark cloud cover/engulfing patterns today, a sign that the pullback that began today likely has further to go. The Nasdaq may find good support at 1380 at this point; 1360 is below that, and 1426.76 is the must-clear resistance on the upside. The Dow (third chart) has potential support right around today’s close. Much lower and critical support at 8325 comes into play. Resistance is 8625-8650. The S&P (fourth chart) has support at 895, 880, and 873 is critical. Resistance is 915-917 and 925. Finally, the VIX, the options volatility index (fifth chart), broke its August low today, a negative divergence in sentiment because the indexes remain below their August highs. The VIX may have reversed up today. Again, we do not expect new lows here, but a good correction is not out of the question.

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