A wobbly start to the New Year today; a hint of a volatile year ahead? Given that you have to go back to 1966-1967 to find a period with less volatility, it’s almost a given that 2004 will be more volatile than the last nine months of 2003. On the plus side, the bank index (first chart below) is pushing an all-time high; can the Dow (second chart) do the same this year? Since the market always seems to fool the most people, it wouldn’t surprise us to see a new all-time high in the Dow this year – followed by a resumption of the bear market. The equity put-call ratio has been all over the map lately, with three straight very complacent .37 readings followed by a very bullish .95 on Wednesday. Short-term, the Dow and S&P have been about as overbought as they can get, so a correction that works off those readings would be a better launch pad for a January rally. After January, we wouldn’t be surprised to finally see a bigger correction. The Dow (charts two and three) faces resistance at 10,450, 10,527 and 10,670, and support is 10,384, 10,350, 10,300 and 10,200. The S&P (fourth chart) faces resistance at 1114, 1125, 1146 and 1170-1177, and support is 1105, 1100-1102 and 1093-1097. The Nasdaq (fifth chart) faces resistance at 2025-2030 and 2050-2056, and support is 2000, 1990, 1975 and 1955.
