CHARTING MONEY: January Goes, And So Does Nasdaq
31 Jan 12:00
By Stephen Cox, CMT
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--Friday is the end of the week and of the month. And
that gives the day's money market settlements a lot of weight on the long-term
charts.
As of late morning, the prospects favor steady to weaker Treasurys, weak
stocks and a dollar rally.
The stock market breaks support levels continually. That's a source of
technical signals, and no experienced observer gives it much thought. But I
believe that the manner in which support is broken can be telling.
Thus, this column has been flagging strong support for the Nasdaq Composite
at 1317.78 - 1312.38. It was a potentially strong bounce point. During the past
four sessions, the index bottomed near 1320. That's a sign of strong support.
But on Friday's open, the Nasdaq gapped below the support band. In my
experience, the jump below support is a frequent market reaction to a notably
strong level.
In other words, 1312.38 - 1317.78 is now strong resistance. Moreover, it's
last-ditch support generated by the Nasdaq's October upside breakout on the
weekly chart. The index is in serious technical trouble as long as the
resistance holds. An extended selloff, to 1278.35, is apparently underway. And
that's likely to be the first step in a renewed long-term bear market.
The Dow Jones Industrial Average will get its next chance at a bounce when
7835.92 support is tested.
Treasury Futures Playing It Safe
A Friday settlement of the CBOT nearby 10-year note above 114-25 would be a
plus for the price bulls, of course. But that development wouldn't necessarily
lead immediately to a meaningful uptrend. I wouldn't consider an end to the
long-term consolidation, roughly between 116-16 and 110-00, until the December
high of 115-19 is taken out.
Friday's early rally was turned back just below minor resistance at 114-14.
Until 114-14 is decisively broken,the nearby is liable to dip again to 113-16.
At that point 114-14 may not be so minor.
Give The Buck Another Week
The stock market's serious hit early Friday isn't keeping the dollar down.
The euro has sunk well below $1.0789 resistance, and it's liable to dip to
$1.0620 before the dollar rally ends. And the dollar has cleared Y119.51
resistance. A move up to Y120.63 is a reasonable expectation.
Dollar bulls should enjoy it while it lasts. But when the nearby U.S. Dollar
Index, now trading around 100.10, gets into the low 101 handle, their party
will have ended. That could easily happen next week.
For more technical analysis see: Dow Jones Newswires, N/DJTA; Telerate, page
4073; Bloomberg, NI DJTA; and Reuters key word search "Charting Markets."
-By Stephen Cox; 201-938-2064; stephen.cox@dowjones.com
(Stephen Cox, a chartered market technician, is chief technician for Dow
Jones Newswires.)
(Data by CSI, Commodity Research Bureau)
(END) Dow Jones Newswires
01-31-03 1200ET |
