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Monday, January 11, 2010

Early Session Profit Taking Cools The Winter Rally


The S&P 500 closed higher on Monday as it extended this winter's rally. Profit taking tempered early session gains and the mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If March extends this winter's rally, the 62% retracement level of the 2007-2008 decline crossing at 1155.15 is the next upside target. Closes below the 20 day moving average crossing at 1118.21 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1147.90. Second resistance is the 62% retracement level of the 2007-2008 decline crossing at 1155.15. First support is the 10 day moving average crossing at 1129.16. Second support is the 20 day moving average crossing at 1118.21.

The NASDAQ 100 closed lower due to profit taking on Monday and the low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought, diverging but are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1847.61 are needed to confirm that a short term top has been posted. If March extends this winter's rally, the 75% retracement level of the 2007-2008 decline on the weekly continuation chart crossing at 1947.00 is the next upside target. First resistance is today's high crossing at 1900.00. Second resistance is the 75% retracement level of the 2007-2008 decline crossing at 1947.00. First support is last Friday's low crossing at 1865.00. Second support is the 20 day moving average crossing at 1847.61.

The Dow closed higher on Monday and above the upper boundary of this winter's up trending channel crossing near, 10,627. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If the Dow extends this winter's rally, the 62% retracement level of the 2007-2008 decline crossing at 11249 is the next upside target. Closes below the 20 day moving average crossing at 10501 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 10655. Second resistance is the 62% retracement level of the 2007-2008 decline crossing at 11249. First support is the 10 day moving average crossing at 10,566. Second support is the 20 day moving average crossing at 10,501.

The U.S. Dollar closed sharply lower on Monday confirming last Friday's key reversal down. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If March extends today's decline, the 50% retracement level of the November-December rally crossing at 76.66 is the next downside target. Closes above last Friday's high crossing at 78.44 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 77.85. Second resistance is the 10 day moving average crossing at 77.89. First support is today's low crossing at 76.95. Second support is the 50% retracement level of the November- December rally crossing at 76.66.



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