THE BOTTOM LINE:
The Nasdaq Composite (COMP) which is leading the market down is nearing some technical support. The S&P might get to 1400-1395 but I don't see it much lower than that for long.
The Nasdaq Composite (COMP) has now retraced 50% of its June-Sept advance (to 2562) and could dip further, perhaps to the 2900 area, representing a fibonacci 61.8% (62) retracement. The Dow has now given back 38% of its June-Sept gains. We could see the S&P 500 (SPX) work down into the 1400-1395 area but I'm not looking for much more downside than that.
MAJOR STOCK INDEX TECHNICAL COMMENTARIES
S&P 500 (SPX); DAILY CHART:
The further dip below the S&P 500's (SPX) up trendline is showing the bearish nature of this recent market cycle. Given the oversold condition suggested both by the Relative Strength Index (RSI) and my Trader sentiment model, I'd be looking to cover short positions on dips to 1400-1395 support, understanding that SPX could dip to 1370. That's about the worst case I see currently in terms of SPX's downside.
Near resistance is at 1420, then in the 1435 area, extending to 1450. 1450 is my 'maximum' upside target for an oversold bounce, at least in the near-term.
S&P 100 (OEX) INDEX; DAILY CHART
The S&P 100 (OEX) chart remains bearish in its short to intermediate-term pattern. OEX is also nearing what should be substantial technical support in the 640-642 area. Support then extends to 628-630, representing a 50% retracement of the June-Sept rally. This is the worst downside I see currently for OEX.
Near resistance is at 650, then up at 660 where I think substantial selling would come in.
The chart pattern suggests that prior lows in the 640 area may be retested. This outlook assumes that the unfolding formation on the right side may 'mirror' that on the left (i.e., a 4-week sideways consolidation with OEX trading between 642-652. This kind of symmetry is not uncommon.
THE DOW 30 (INDU) AVERAGE; DAILY CHART:
The Dow 30 (INDU) continues bearish in its chart pattern but could be basing in the 13050 area. Support then extends to 13000. 12850 represents a 50% retracement of INDU's June to September advance and the 'worst case' downside I'm estimating currently.
If there's a short-term oversold rebound, from the 13050 area the Dow might rebound to 13290-13300 resistance; the next resistance I see at the previously broken up trendline intersecting around 13440. I don't see INDU breaking out above this later resistance on a first go.
A sideways move with the Dow staying mostly above 13000 might go on for a while as earnings are now trending lower into the 4th Quarter.
NASDAQ COMPOSITE (COMP) INDEX; DAILY CHART:
The Nasdaq Composite (COMP) chart remains bearish but the Index has also reached what I think will be an area of support that marks a completion of a 50% retracement of the last big upswing, the June to September rally. So much for 'going away' after May. I never like market slogans because by definition they are clichÃ©'s and the market is never subject to simple prescriptions related to seasonal factors.
COMP should find good support on its dips below 3000, with more rockbed support in the 2900-2905 area.
For those in tech-related puts or in other bearish strategies, there's been a good-sized pullback in what is still a bull market on a long-term basis. I rarely expect MORE than a 50% retracement in the Composite but at most a fibonacci 61.8% (rounded to 62).
NASDAQ 100 (NDX); DAILY CHART:
The Nasdaq 100 (NDX) Index chart remains bearish but like the Composite seems to be finding support where the chart would suggest it would, at the July-August highs in the 2662 area; prior resistance once penetrated, expected to 'become' subsequent support. So far this pans out in the unfolding pattern.
Most solid technical support looks like 2610-2590 and would represent a 62% retracement of the June-Sept advance. That's the furthest downside I see currently.
Key near resistance is at 2700, extending to 2750-2755. Closes back above the June-September up trendline (2755-2760 currently) is needed to turn the intermediate trend back up.
I'm looking for a leveling out, with a possible further dip to test the low-2600 area, where I'd be a buyer and bullish.
NASDAQ 100 TRACKING STOCK (QQQ); DAILY CHART:
The Nasdaq 100 tracking stock's (QQQ) chart is bearish but I think FURTHER downside is limited and would be a buyer of the stock in the 64-63.5 area.
Near resistance looks like 66.5, with fairly major resistance in the 68 area.
The volume to price pattern suggests potential bottoming action.
RUSSELL 2000 (RUT); DAILY CHART:
The Russell 2000 (RUT) chart is bearish and the Index looks headed to a test of the 800 area, which is a 'logical' stopping place for the current down cycle. Below 800 I anticipate fairly substantial support at 783-780.
Key resistance is back up at the trendline, currently intersecting at 830. A Close above 820 is a plus but bullish with Closes above 830.
GOOD TRADING SUCCESS!