Technical Analysis: The Waterfall Continues

Well, the longest run since the 1930s without a 5% correction sure seems like it could end soon. Despite an oversold correction and some decent fear, the market accelerated its plunge today. There are two hopeful signs, however. The VIX (first chart below), the options volatility index, went vertical today, a sign that there’s at least some decent fear out there, and the TRIN (second chart), a measure of buying and selling pressure, had back-to-back readings above 2.0, a historically bullish sign that we should note failed in the 2000-2002 bear market, but worked fine when it made an appearance last year. The decline the last few days has formed an imperfect three black crows on just about all indexes; however, that often means a bounce before more downside occurs. The Dow (third chart) looks pretty busted at this point. 10,250 is minor support, as is 10,125, but the next strong support level is 9900-10,000. Resistance is 10,350-10,425, 10,500 and 10,550. The S&P (fourth chart) has resistance at 1137-1138, and support is 1122, 1112-1115 and 10000. The Nasdaq (fifth chart) broke 1991 and 1978 supports, which are now resistance levels. Support is 1950, 1940 and 1913-1920.

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