Stock Market Forum: market watch February 23, 2009

DIA

Watch out for a break or close below $77. Consider that a very bearish signal. Be prepared for a significant lower move on the indices. Measured move price target for DIA is set at $66. But for this week support is at around 71.5. Resistance is around 75.

SPY

Marginal support around the $76 price level. We may see a morning star reversal on the SPY this
week. It would be a good short-term trade
for the week. Watch for it to run up to the 50 SMA. The final requirement would be a gap up on Monday. If the SPY opens above $78 tomorrow, you can take a long position early in the day and place your stop just below $78. Support at S1=$75 and S2=$74.25. Resistance is
R1=$78.50 and R2=$81.25.

QQQQ

Over the last couple of months, we see that the red weeks have much smaller bodies than the
green weeks on the QQQQs. That’s what gave us the rising threes pattern two weeks ago.
Last week was no exception–the sellers didn’t set a new low from the pattern and the red
body was small. As long as this holds, the QQQQs will likely stay in this trading channel from
about $28-$31. We warned you about sellers last week based on the failure of the rising
threes to follow through. Now we’re paying close attention to see if we get a long red candle
in the weekly chart. That would signify a sharp increase in selling pressure and a new move
down. For the upcoming week, support will be S1=$28 and S2=$26.75. Resistance this week
is R1=$29.75 and R2=$30.40.