The Dow, the S&P and the Nasdaq (first three charts below) all put in some manner of “evening star” reversal patterns the last three days, a white stick and a doji star followed by a down day. A break of this week’s lows – 8945, 972 and 1597 – could cement a double-top. Support levels on the Dow are 9053, 9000, 8945 and 8931. Below 1597 on the Nasdaq, 1580 and 1540-1550 are support, and below 972 on the S&P, 965 and 945-950 is next. Resistance levels are 9200 on the Dow, 1000 on the S&P, and 1653-1660 on the Nasdaq. One hint that this correction may run a while is all the call buying for a big decline. And a correction to last week’s column on Dow Theory: Martin Pring does not think that the Transports have confirmed the Dow’s breakout yet, but still must put in another intermediate term correction followed by a new high. However, for other technical reasons, he believes a cyclical bull may have begun.
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