Friday, August 14, 2009

08/14 - Chart of the week


The three major US equity indices have all stalled at key technical levels. The S&P 500 has paused at 1013.94, the 38.2% retracement of the 2007 & 2009 range. The DJIA has paused at the same retracement level (at 9424.70). The Nasdaq has completed a double bottom measured move near 2010 and has consolidated just below it over the past few sessions. While it may be premature to call a top, a correction is in store as these key resistance levels remain intact. The counter-rallies have been brief, mostly limited to 2 down days before finding a higher level of support. Thus, one way to gauge market strength will be to see whether Friday's retreat can extend through Tuesday, more than just a 2-day correction. If equities manage to rebound, however, there is a substantial probability that these equity indices will race to new highs.