To: Softechie who wrote (93353 ) 7/10/2002 11:32:07 PM From: Softechie Read Replies (1) | Respond to Technical Levels : So yesterday, the Nasdaq erased the remainder of Friday's 4.9% rally. This places the index in a similar situation -- or at least at essentially the same level -- as its July 3rd close of 1,380. It's also worth noting that the Volatility Index (VIX) finished yesterday at its highest closing level since November 1, 2001. By that measure, it looks as if market uncertainty has reached its highest levels in over eight months. Now for those of you thinking ahead, the Nasdaq Volatility Index (VXN) is not quite at its peak levels of 64.1 reached last week. Nonetheless, it remains in the ballpark of its November highs. With yesterday's close just over 62.00, the VXN is also comfortably above its 200-day simple moving average just under 51.00. So it doesn't take a rocket scientist to assess the current market. The contrary indicators are at notable highs while the Nasdaq itself is trading at its worst levels since May 1997. The support points are generally solid for intraday activity, but it tends to be a crap shoot as to whether any given level might hold on the close. From the standpoint of strict technical levels, keep an eye on support at 1380 -- this approximates the July 3rd and July 9th closing levels, and served as the launching pad for that fleeting July 5th mania. If 1380 should fail to hold, then the recent low at 1357 will become the next target. To the upside, watch for straight-line resistance at 1400 followed by additional overhead in the area of 1420. Now outside the Nasdaq, there is one point of interest on the Dow Industrials worth mentioning. Through all of the recent carnage, the index has managed to hold closing support at 9,000. The closest the index came to failure was its July 7th close at 9,007. We've commented on support at 9,000 in the past, and if there is a silver lining to the broad market picture, it may be that the technicals on the Dow remain intact. Unfortunately, that silver lining also comes as something of a double-edged sword. If the index should fail to hold 9,000 on a closing basis, that may be the trigger for those reaction lows -- the panic selling or capitulation -- that so many technicians are seeking. Certainly worth keeping an eye on regardless of what or where you trade. -- Mike Ashbaugh, Briefing.com
