The market the last few days has been a study in what can happen when traders position one way and the market heads the other. After Tuesday’s strong intraday reversal, it appeared that the market had put in a short-term low. When that clearly wasn’t the case, traders had to reverse positions, which fueled the move to the downside. Sometimes failed patterns can produce stronger moves than patterns that act as expected, and the last two days have clearly been an example of that. So where are we now? 1940 Nasdaq (first chart below) looks like the last hope for the bulls to us, but IBM’s earnings miss is threatening to send us below that level in the morning. 1900 looks like the next strong support below that. Resistance is 1968-1970, 1992 and 2005. The Dow (second chart) has important support at 10,250, with 10,150 and 10,000 below that. Resistance is 10,350-10,380 and 10,475. The S&P (third chart) has support at 1154 and 1150, and resistance is 1164, 1170, 1175 and 1185. The good news is that the market should be at pretty oversold levels in the morning, so let’s hope for a reversal.
