Technical Analysis: Stocks Turn Down

Clear breakdowns today on rising volume; nothing neutral about the chart picture today. We’ll start with the few positives: the equity-only put-call ratio at .75 is showing a lot more skepticism, and internals were okay under the circumstances, including a rise in new highs, a plus on a down day. But otherwise the picture here is a negative one. The SOX, the semiconductor index (first chart below), may be putting in a head-and-shoulders top, but the index would have to break 285 to cement that top. 320 is first support. The Dow, S&P and Nasdaq (charts two through four below) all had clear breakdowns out of rising wedges, and rising volume confirmed the breakdowns (note on the Dow in particular that today’s volume broke a trend of declining volume). The next major support levels are 8580-8600 on the Dow, 908 on the S&P, and 1425 and 1400 on the Nasdaq. Earnings from IBM and Microsoft tomorrow night are now the last hope for the bulls. Today’s highs of 8850, 933 and 1460 should now be significant resistance.

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