Technical Analysis: Stocks Reverse

A nice reversal again – but for the third time in a week, the internals lagged, showing that buying remains selective. So will this rally be more than another one-day wonder? The rally was structured enough off the lows – with no overlap – so that there could be more to it. The Nasdaq (first chart below) closed right at 1280 resistance; if it can clear that, 1292-1300 is next. The index sliced through 1260 support today, raising the odds that that gap at 1220 will fill eventually. Possible supports are 1263-1270, 1260, 1253, 1240, 1230, 1220 and 1193-1200. The Dow (second chart) has support at 7470-7500, 7400 and 7197-7286, and resistance is 7600-7650 and 7700-7750. The S&P (third chart) has support at 795-800 and 768-775, and resistance is 806, 815-818, 822 and 830. The Transports (fourth chart) sliced through the Sept. 2001 lows of 1942 but then recovered, a critical area for the market. Finally, with another expiration coming up next week, it should be mentioned that Max-Pain – the level where most options expire worthless – is solidly between 24 and 25 on the QQQ, the Nasdaq 100 tracking stock. The QQQ closed at 24.23 today.

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