Profit Taking Slows the New Year Rally, Signals Remain Neutral to Bullish

The S&P 500 was lower due to profit taking overnight as it consolidates some of this week's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If March extends last year'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 1110.69 are needed to confirm that a short term top has been posted.

First resistance is Tuesday's high crossing at 1132.80
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 1121.91
Second support is the 20 day moving average crossing at 1110.69

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The NASDAQ 100 was lower due to profit taking overnight as it consolidates some of Monday's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If March extends last year'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 1833.35 would confirm that a short term top has been posted.

First resistance is Tuesday's high crossing at 1890.25
Second resistance is the 75% retracement level of the 2007-2008 decline on the weekly continuation chart crossing at 1947.00

First support is the 10 day moving average crossing at 1869.92
Second support is the 20 day moving average crossing at 1833.35

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The March Dollar was higher due to short covering overnight but remains below initial support marked by the 10 day moving average crossing at 78.13. Stochastics and the RSI are bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 77.69 are needed to confirm that a short term top has been posted. If March renews last month's rally, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target.

First resistance is the 10 day moving average crossing at 78.13
Second resistance is the reaction high crossing at 78.77

First support is the 20 day moving average crossing at 77.69
Second support is Tuesday's low crossing at 77.39

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