Option Investor
Market Updates

Support Becomes Resistance

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I have a bad habit of removing my trend lines too quickly after they are broken. It makes my chart a little easier to read, but stocks have a tendency to pull back and test the trend line before resuming their move.

Nasdaq-100 and Computer Tech Daily Charts

After breaking the April up trend last week, technology sectors have rallied back up to the broken trend. This has been the level of contention over the past two days. The Computer Technology Index's (XCI.X) failure to get above that line today has formed a quite bearish looking candle. It's still early in the day, but if it closes that way it could be a bad day for the Computer Index tomorrow. These days it's hard to tell. I like the fact that the 50-dma is slowly swooping under prices, and is starting to turn up. Stochastics have turned up, and look like they still have some room to the upside. By the time they hit overbought territory, sectors should be testing previous highs. Will there be enough buying interest left to push us to new highs? It looks more like a trading range is setting up.

Jeffrey Canavan
Assistant Analyst

Intraday Update Archives