After years of relative stability the weekly charts of the indices are just a mess of volatility; a test of Oct/Nov 2008 lows looks to be a necessity if a certain degree of stability, and more importantly confidence, is to be restored to buyers. The S&P has been fishing for a bottom; the last attempt came on December 1st and was confirmed on December 29th but supporting technicals are more-or-less flat - so it's hardly a ringing endorsement. The story is no different for the Nasdaq, the only difference was the bottom and confirmation came 1 week later than for the S&P: Nasdaq Bullish Percents may be on intermediate 'sell' signals, but on the weekly chart they show a significant break of declining resistance dating back to the start of 2007 (which turned into an early warning sign of the crash which followed). Whether this turns into a new bullish signal will be dependent on starting a run of higher lows and higher highs. But the Percentage of New Highs cleared a...

Better late than never as buyers let the world know they are still alive, if feeling a little queasy. Volume was very respectable and marked the first accumulation day after a long sequence of down and distribution days. Bailout rumors fueled the day's recovery but the jury is still out as to whether any of this will work. First upcoming test for Friday is the 50-day MA with the 20-day MA not far behind. The Dow kicked in at once was considered support for a reversal head-and-shoulder pattern. But technical weakness continued. The Russell 2000 made a similar stand as the Dow from a slightly stronger technical position: So far, all of this looks like a rally to define upper ranges of channels; channels to test November lows. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

The PowerShares DB Crude Oil Double Long ETN ( DXO ) has been ignoring recent weakness in the price of oil and has firmly traded at is 20-day MA for the past 4 days. Volume has been heavy and with the Bollinger bands tightening the likelihood of a sharp move (higher) increases every day the 20-day MA holds as support. Yesterday's bullish hammer keeps things interesting and a volume move past $3.00 would set oil bulls alight. The bullishness runs in contrast to the United States Oil Fund ( USO ) which drifted below its 20-day MA but is finding support at $30 - which looks good based on a similar defence at the end of December. If there is a black mark it's that volume accumulation needs to swing higher because the trend is all distribution at the moment. The final case for bulls comes from the PowerShares DB Crude Oil Double Short ETN ( DTO ). If this isn't a double top I would eat my hat (if I had one!). Inverse hammer bang on resistance from December lows, lows which the ...

The general consensus for a short term bounce took a hit as a vulnerable market got knocked with another swathe of selling. In the case of the Nasdaq the selling still couldn't bring the index to oversold levels: The Dow broke support of the MACD bullish divergence and added a second distribution day for the year. The Dow has seen six down days in a row and is flirting with early December lows. The semiconductor index also took a hit as it lost the last vestiges of short term support. Any bounce here will only define the upper boundary of a downward channel retest of November lows. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Adding to the intermediate top picture are the Bullish Percents for the Dow, S&P and Nasdaq are now all negative. None of the indices came close to challenging price resistance during the Bullish Percents rally; very disappointing and a worry for bulls looking for a tradable bottom. I think money will stay on the sidelines (or move back there for those in the market) over the next couple of weeks. I don't think we are going to see another big downleg like Sep/Oct as the associated period of volatility is a rare occurrence. More likely is a series of drip losses to take the indices back to November lows. From there it's anyone's guess but it will mark the first point of entry for value buyers to step in. During these market conditions I like to read Richard Lehman's analysis on Trend Channels to get an idea as to what's happening over the short term. His reading of what's going on is a bounce looks best bet forward. If a bounce does materialise I will be lo...

Intermediate top, but short terms are working towards oversold conditions - although they are not there yet. Volume climbed which would suggest an accumulation day, but the narrrow candlestick doesn't suggest real buying at work There was no real change for the Dow with its fifth loss day in a row. Although the MACD bullish divergence is currently under threat. I agree with the commentator from my previous post; things are looking good for a bounce, but I suspect it will stall out at the the 50-day MAs for the various averages. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

With yesterday's loss of 20-day/50-day MAs and rising support from November lows, combined with the bearish crosses in Breadth indicators at intermediate top resistance it looks like the Santa Rally is done. What's important is how the indices react on the move closer to November lows. The Nasdaq did look like it was going to break out of its bear market pattern with respect to breadth resistance, but it looks like the goal posts have made minor changes. The S&P conformed more to traditional bear market breadth resistance, but is effectively matching the topping pattern in the Nasdaq. Confirmation of the top will require a test of the 20-day/50-day MAs and/or a test of former support-current rising resistance as anchored by November lows. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website