Nasdaq failed to crack through resistance although technicals returned all green. With the Obama plan due on Tuesday the catalyst is set for either a bounce off resistance or a solid move through; a quiet day Tuesday won't be. Large caps won't be helping out. The Dow is hugely underperforming against Tech but the S&P is doing a little better; the 50-day MA remains resistance. Given the semiconductor index has breached declining resistance it is now up to Tech to follow suit. Will Obama's stimulus provide the kick the Nasdaq needs? Battle lines are set. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

A solid past two days has given the bulls some leverage; what can they do with it? Yong Pan has seen short term strenght turn neutral, but the intermediate term picture has turned more bullish. Yong notes low CPC figures are concern although I would give them a more mixed view (look at end of November). Will this be an overreaching rally and summer collapse as I might think happen, or something else? Complex head-and-shoulder pattern still playing out; but resistance (in addition to the 50-day MA) still a concern. Other than stochastics the technical picture is not too bad if your are bull, even then, stochastics can remain overbought for a while: The consolidation triangle is one to watch; 900 looks like it will be a battleline Distribution days are drying up; sideways market best bet forward? Maurice - get well soon! But some good charts on his swing trading. The negative divergences suggest Monday will be a down day: This volume in the homebuilders ( XHB ) would have slipped me by

Interesting action on the weekly charts. For the S&P last week ranked as one of accumulation with a respectable uptick in the supporting MACD; although stochastics remained oversold. Similar trends played out in other indices but nothing to indicate a powerful reveral. The December 'buy' signal holds for many of the indices; the Nasdaq 100 is close to triggering one of its own: But the Nasdaq Summation Index still has significant weekly resistance to break Certainly last week was better than a collapse, but it will take more than one week to put a sound footing in place. The way things are looking (deep oversold conditions and a squeeze in breadth indicators) we could be in for a protracted sideways market for the bulk of 2009. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Breadth indicators remain a mix of the overbought (Summation Index), neutral (Bullish Percents and Percentage of Stocks above 50-day MA), and oversold (Percentage of Stocks Above 200-day MA). While intermediate-term pressures are best measured by the Summation index, long term conditions will likely be dictated by action at stock 200-day MAs. There is a number of interesting factors at work. Plenty of traders are looking at November lows as a major bottom and have pushed a good percentage of stocks above their 50-day MAs based on the associated 'value buying'. However, the lack of follow through has left many traders nervous and this has reflected itself in the pennant pattern developing in this breadth indicator. This uncertainty has to be taken in the context in a breakout in the number of stocks trading above their 200-day MAs; a much stronger bullish long term signal. Now things are still horribly depressed, but we may soon see fresh leadership enter the market which will s

If you ignore the continued lackluster action in large caps there was a modicum of joy with a significant resistance line break in the semiconductor index. This help push the Nasdaq above its 50-day MA and kept the Nasdaq 100 above its 50-day MA. The semiconductor index is not totally out of the woods with reaction highs at 224.59 and 236.12 to be breached; but if the latter is surpassed it would leave a clean run to the 200-day MA. Don't underestimate the importance of the semiconductors as a leading index in the early recovery phase from a recession. While I am not suggesting the economy is going to turnaround tomorrow it is good to see some respectable demand from investors for this sector (look at on-balance-volume for the semiconductor HOLDRs ( SMH )). Unfortunately, my personal semiconductor purchase in September jumped the gun leaving me sitting on a loss; but it is acting better now than it has in a long (long) time. Dr. Declan Fallon, Senior Market Technician, Zignals.co

It was looking promising for the Nasdaq as it pushed early gains, but these gains dissipated by early afternoon on the release of earnings by Kraft Foods and Disney . An additional stress is about to enter the fray as declining resistance from June and September reaction highs will soon be applying pressure. The Dow clocked up a firm distribution day and price action looks destined to reach November lows, much as it did for the DJ Transportation index. Technically, the Dow Jones is in significantly worse shape than the Nasdaq. The only index which looked like it could offer something, the semiconductor index, was pegged by June-September resistance; however, a push past 220 would be very bullish. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Volatility is not exactly firing on all cylinders, although it remains frothy relatively speaking. A declining 50-day MA which is acting as resistance suggests a trend towards lower volatility which should be good for stocks. However, the double bottom has not been invalidated and with the index wedged between its 200-day and 50-day MAs it effectively operates in a no-mans land. Until one or the other breaks it will keep the market in a sideways consolidation with a slight (current) bullish bias. Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website