Technical Analysis: Nasdaq, S&P At Resistance

Note: There will be no technical analysis next week; it will return December 2.

The S&P 500 (first chart) was stopped at its March downtrend line this week. A move above 935 next week would likely target the critical 950-965 resistance zone. A move below 925 would likely signal the start of a correction. 910 is the first good support below that, followed by 895-900 and 875. The Nasdaq (second chart) closed the week right at its January downtrend line, and almost any move higher next week would break it. 1500-1515 is strong resistance, and then 1540. Important support can be found at 1426, 1400 and 1375. The Dow (third chart) has spent most of the last day or so in an 80-point range between 8800 and 8880, so whichever way it breaks out of that range could be good for at least an 80-point move. 8750, 8600, 8500 and 8400 are support, and 9077 is major resistance. Finally, an observation on the VIX (fourth chart), the options volatility index: when it has hit its weekly lower Bollinger Band in the past, as it did this week, it has turned up within a couple of weeks to touch its upper band. That’s not to say that it will happen again this time – those other occasions occurred with the VIX around 20, while it’s currently just under 27 – but it’s something to keep an eye on. A rising VIX would likely mean a declining stock market. Also important this week will be the equity put-call ratio. Below .45 is a negative for stocks, around 1.0 is bullish. At its current .60 reading, it is neutral to supportive given how far stocks have rallied.

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