The DOW moved through the recent swing high at 9918 from 9/23 to challenge significant resistance from the relatively flat market action from 2004 (see 20 year monthly chart).  There is also very stout resistance from 5/1999 through 6/2001.  The next 1000 points on the upside in the Dow will be difficult to achieve due to the large amount of trading activity at these levels.  The Short term chart reveals that the index moved up to the top end of the Broadening Bullish Trendline Channel that was pointed out last week.  Friday’s action printed an almost perfect bearish engulfing pattern on increased volume which bodes for a move back down to recent support levels.  Support resides at 9918, 9834, 9496 and 9430.  The 50 SMA may also act as support at around 9550 if and when the index gets there.

The SPX is testing the “shelf” from 2004 as well as the swing low from March 2001 (see 20 year monthly chart).  The index moved up close  to testing the upper trend Line from last week’s chart and very close to my projected move to 1080. The index formed in a bearish candle on increased volume.  We are likely going down to test support at the swing high from 9/23 at 1080 and the gap from 10/13-14.  The next downside target is at 1040 and then 1020.

The COMPQ is displaying some weakness at this level putting in two narrow range trading days followed by a “Hanging Man” candlestick.  Look for a small pullback or at best some sideways trading this week.  Some major tech companies are reporting this week beginning with AAPL on Monday.  If the reports are favorable it may negate what the charts are showing us now and push higher.  Follow the market but stay hedged.  Support resides at 2143, 2128, 2085, 2059 and 2040.  The 50 SMA may also provide support at 2050 if and when the index gets there.

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