Tech Talk: Indexes Log 10th Daily Failure (SPY, IWM, DIA)

Courtesy of John Nyaradi.

Major U.S. stock and ETF indexes fail for 10th straight day at major resistance

A quick glance at the chart from StockCharts.com paints the picture.

The S@P 500 (NYSEARCA:SPY) has stalled at the 1370 level for the last ten days, unable to break higher and continue the up trend started in December.

The story for the Dow Jones Industrial Average (NYSEARCA:DIA) is the same as the index has stalled out at the psychologically and technically important 13,000 level.

And the Russell 2000 (NYSEARCA:IWM) is even more dramatic as it has been unable to reclaim highs made in early February and now has fallen far enough to be approaching its 50 day moving average.

A glance at the chart of the S&P 500 (NYSEARCA:SPY) is instructive as, in addition to the stall at resistance, we see confirming indicators of overbought conditions and the onset of further weakness.

In the top red box we see RSI in overbought territory and turning down.  Next level down we see MACD rolling over to a “sell” signal.  Below that we see Stochastic also rolling over to a “sell” signal from overbought levels.

So if things are to turn lower, how low can it go?

In the S&P 500 (NYSEARCA:SPY) we can see support levels at the horizontal lines near 1340 and then 1300, along with the 50 day moving average at 1317.  So there’s plenty of support not too far away, with the bottom end of major support some 70 points or 5% away from current levels.  However, a drop below 1300 would set up a scenario for a quick drop to 1260 or 110 points from today, a more significant drop of approximately 8%.

The S&P 500 (NYSEARCA:SPY) and the Dow Jones Industrial Average (NYSEARCA:DIA) and the Russell 2000 (NYSEARCA:IWM) are all literally screaming “sell.”  Coming days will tell us how deep such a sell off might be.

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