Markets Continue to Climb a Potential "Wall of Worry"

The S&P 500 closed higher on Tuesday as it extends this week's rally. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are turning bearish hinting that a short term top might be in or is near. However, closes below the 20 day moving average crossing at 1108.94 are needed to confirm that a short term top has been posted. If March extends last month's rally, the 62% retracement level of the 2007-2008 decline crossing at 1155.15 is the next upside target. First resistance is today's high crossing at 1132.50. Second resistance is the 62% retracement level of the 2007-2008 decline crossing at 1155.15. First support is last Thursday's low crossing at 1110.00. Second support is the 20 day moving average crossing at 1108.94.

The NASDAQ 100 closed lower due to profit taking on Tuesday as it consolidated some of Monday's rally. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought but are neutral signaling that sideways to higher prices are possible near term. If March extends last month'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. Closes below the 20 day moving average crossing at 1828.06 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1890.25. Second resistance is the 75% retracement level of the 2007-2008 decline crossing at 1947.00. First support is the 10 day moving average crossing at 1863.72. Second support is the 20 day moving average crossing at 1828.06.

The Dow posted an inside day with a lower close on Tuesday as it consolidated some of Monday's rally. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are turning bearish hinting that a short term top might be in or is near. However, closes below the 20 day moving average crossing at 10448 are needed to confirm that a short term top has been posted. If the Dow extends Monday's rally, the 62% retracement level of the 2007-2008 decline crossing at 11249 is the next upside target. First resistance is Monday's high crossing at 10604. Second resistance is the 62% retracement level of the 2007-2008 decline crossing at 11249. First support is last Thursday's low crossing at 10,423. Second support is the reaction low crossing at 10,263.

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