Downside Dominates

In spite of a bounce yesterday, declining issues still outnumbered advancers, and of the 87 sub-indexes in the S&P 500, 53 fell while only 34 rose.

S&Ps were trading down 250 points at 1476 this morning. On the downside, we see support at 1475, 1472.50, a key area at 1470.50, 1469, and 1468, which is a major area. On the upside, we’re looking for 1477, 1483.50, a major area at 1485, 1489, 1490 and 1493.

In the NASDAQ, we made a high of 4210 on September 1, then fell to 3600 on Monday. That’s a decline of more than 15%. We have now rallied from 3600 to a high of 3810, which is about 5.4%.

In those trading sessions, we’ve had eight down days and three up days, including yesterday. We have not had two up days in a row in September. Today should be a very crucial day for the NASDAQ. If it can build on yesterday’s gains, it certainly makes 3900 a very reachable target, and probably a move up to 4020.

NASDAQ was trading down 20 handles at 3784. On the support side, we see 3779 to 3770, 3740-3735, and 3710-3695. Below 3700, we would expect some very volatile action, and most likely a trade back down to yesterday’s low of 3662.

On the resistance side, we see 3815 up to 3830, then 3845-3860. This entire area from 3800 to 3860 is critical resistance. If we get above 3860, it should be a sign of strength, leading us to 3900 and most likely back to 4000.

In the Dow, we have dropped five days in a row, and in that time, we have sold off nearly 500 points. The market is getting close to some trendline support. We would expect to bounce off this support and maybe retest 10,900 in the cash. Only a close above 11,050 will change the negative bias to the market. Any close below 10,700 puts a damper on bullish enthusiasm.