Thursday, February 25, 2016



Broadly speaking, significant technical tests are underway this week. This applies to the major U.S. benchmarks, and influential sectors. The U.S. markets' longer-term technical bias remains bearish.

Technically speaking, the S&P 500 has balked at its second test of significant resistance. The S&P 500 has rallied from two-year lows, reaching a significant technical test.

Beyond technical tests, the 2016 downdraft has inflicted broadly-based damage, and the S&P 500's longer-term backdrop supports a bearish view. The next several sessions, and the February close, should add color to the immediate outlook.

The specific area matches its breakdown range top — S&P 1,950 — a level that remains an important bull-bear battleground. Against this backdrop, the S&P 500's longer-term technical bias remains bearish. The index hasn't closed atop its 50-day moving average since Dec. 29.

Significant resistance rests at 1,950, closely matching the 50-day moving average, currently 1,949.5. Near-term support rests at 1,927, and is followed by the 10% correction mark of 1,917, matching last week's close.

The Dow Jones Industrial Average has reached six-week highs, closing Monday slightly atop major resistance just under the 16,600 mark.

With Tuesday's early downturn, initial support holds around 16,460, and is followed by a deeper floor just above 16,200. Ssignificant resistance rests at its range top, closely matching the 50-day moving average, currently 16,633. The Dow closed Monday at 16,620 — just under the 50-day — and its response to resistance, over the next several sessions, should be a useful bull-bear gauge. 

The Nasdaq Composite has support at 4,548, and is followed by a more significant floor at 4,517. The Nasdaq is the weakest major U.S. benchmark. It's positioned firmly under the 50-day moving average, and the February peak. Its first notable support matches the former breakdown point, around 4,517. More broadly, the Nasdaq's longer-term technical bias remains bearish.

The Big Picture

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