Today’s dramatic reversal aside, we’ll resist the urge to grow too bearish just yet. For starters, while the news was good, it had little fundamental impact, so with the rally already a little shaky, the exuberance in the overnight futures was a good excuse to take profits. However, with the speed of today’s decline, more downside appears likely before the traditional year-end rally, perhaps just a retest of the recent lows. We’ll start with the one positive today: new highs and lows actually improved today, a big plus, and something to watch. Otherwise, the signs were negative. Anyone buying the gap up in the Nasdaq (first chart below) today got crushed, and the surprise was just how much support the index took out on the way down, ending the day just above 1915 support. 1900 and 1878-1887 are next supports, and 1932-1935 and 1940-1942 are resistance. The S&P (second chart) was stopped at the bottom of 1083-1093 resistance. 1075 is first resistance, and support is 1064, 1058-1060, and 1050-1054. We would note one potential negative on the Dow: -DI is getting close to 10, a reading we haven’t seen since the March 2002 peak. That suggests that no one wants to sell here, a negative. Resistance on the Dow is 10,080-10,100 and 10,140, and support is 10,000, 9975-9980, 9900-9910 and 9850.
