The indexes reversed down from an extremely overbought condition today; now will we get a correction that lasts more than a day or two? We still prefer a test of the critical support levels of 1540-1550 on the Nasdaq and 945-948 on the S&P (see first two charts below). The Dow (third chart) is back below 9000, but in the scheme of things, that's not a big deal since the Dow Theory buy signal was given last week. We don't see that index hitting major support until 8600-8750. The daily charts (three through six) also give support in our target areas. To the upside, 1623-1625 on the Nasdaq, 979 and 986.82-987.76 on the S&P, and 9000 and 9061-9066 on the Dow are resistance.
Don't miss the Company of the Week Technical Analysis Explained: The Successful Investor's Guide to - Google Books Result::
href=http://books.google.com/books?id=zuz8YcTFNnsC&pg=PA422&lpg=PA422&dq=Technical+Analysis:+Indexes+Reverse&source=web&ots=HcViND00Am&sig=9vFPZb1UdZqGhnjZUJNJ65XnDrw&hl=en&sa=X&oi=book_result&resnum=43&ct=result class=l onmousedown=return clk(this.href,,,res,48,)>Technical Analysis Explained: The Successful Investor's Guide to - Google Books Resultby Martin J. Pring - 2002 - Business & Economics - 560 pagesTechnical Analysis Explained Finally, at E, we see a breakout by the Demand Index from a reverse H&.-S pattern, but it fails.
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Technical Analysis of Stock Trends - Google Books Result::
href=http://books.google.com/books?id=Xu1QwIwCJdQC&pg=PA546&lpg=PA546&dq=Technical+Analysis:+Indexes+Reverse&source=web&ots=H7AGtcXIvf&sig=65pE0ZcYy5NiUdjc4bWq9dpkNBc&hl=en&sa=X&oi=book_result&resnum=72&ct=result class=l onmousedown=return clk(this.href,,,res,77,)>Technical Analysis of Stock Trends - Google Books Resultby Robert D. Edwards, John Magee, W.H.C. Bassetti - 2001 - Business & Economics - 709 pagesAs the Index declines, the reverse would happen. But it also provides the mechanism by which the technical method can stand on its merits,
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Technical Analysis: Indexes Reverse