Technical Analysis: Sentiment Gets A Little Silly

The equity put-call ratio may have been the most interesting aspect of today’s trading. Despite a market that was down most of the day, the equity put-call ratio closed below .50, a sign of some significant complacency. The market may yet need a long pause before it can continue higher. Tomorrow night is Cisco’s earnings, and October employment data will be released on Friday, so the market is likely to be whipped around by news for the rest of the week. Longer-term, today’s Challenger report showing very high layoff announcements is a negative for employment down the road; that may become a more closely watched indicator in the months ahead. The Nasdaq (first chart below) faces resistance at 1967-1971 and 2000, and support is 1950-1953, 1940 and 1915-1920. Short-term, the last two days look like a bearish harami cross on the Nasdaq, suggesting a possible down day tomorrow. The S&P and Dow (second and third charts) could be forming bearish rising wedges off the late September lows. The one thing missing from those patterns is falling volume, but they do suggest a market vulnerable to correction. The S&P has major resistance at 1070, and 1050 and 1033-1040 are support. The Dow (third chart) has a big rising resistance line at about 9925, and support is 9800-9819, 9750 and 9700.

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