The Nasdaq (first chart below) broke 1300 support today, which now looks like it should be tough resistance. 1263-1273 is first support, and then 1220. The Dow and S&P (second and third charts) pierced falling support lines before recovering. 7830-7850, 7700 and 7500 are support on the Dow, and resistance is 8000 and 8150. 825, 800 and 775 are support on the S&P, and 836, 840, 846 and 857 are resistance. The equity-only put-call ratio came in at .70 today, the first day this week that hasn’t been skewed by massive trades in 2005 QQQ LEAP puts. That .70 level shows some fear on the part of traders, but closer to .80 would be better. Finally, a quick look at where we think the Dow may ultimately be headed (fourth chart): the 5700-6300 range. That would encompass the 50% retracement levels off the 1932 and 1974 lows (5855 and 6160, respectively), along with the level where money flow peaked during the bull market (5700). A lot to support the market at those levels, and a good place to look for a powerful rally, and with any luck, a cyclical bull market.
Don’t miss the Company of the Week – every week – at http://www.wsrn.com/COW/.
Special report: For a free introduction to technical analysis and chart patterns, visit http://www.internetstockreport.com/guest/article/0,1785,2571_5/00051,00.html.