Stocks Rise On December 29 But Trouble Lies Beneath

Stocks finished the day slightly higher, with the S&P 500 rising by 14 bps and the Qs finishing lower by one bps. A lot is going on in the market, even though it seems like a whole bunch of nothing.

NASDAQ

I think the most critical chart starts with the Nasdaq Composite, with the index trying to break above critical resistance two days in a row and failing. There is an apparent and powerful resistance at 15,850, and it has held firm to this point.

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It may look like a double bottom pattern to some, and it could be. But I would caution that this does not work out as a double pattern, and failing again at 15850 would likely drop below the index below the previous lows. I remember this setup very well from the 2018 drop, with the perceived W pattern.

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Is it a perfect match? No, of course not, but I think it just tells you that if you don’t get a break out by tomorrow or Friday, good chance we are going much lower.

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DOW JONES

Today, the Dow Jones Average climbed right to the prior high on November 8 and stopped. So like the Nasdaq, a critical level to be watched tomorrow, with failure leading to more weakness.

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RUSSELL 2000

Meanwhile, the Russell 2000 has risen right back to the trend line and failed.

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Apple (AAPL)

Meanwhile, the same story for Apple, trying to make a new high, but has been unsuccessful.

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Microsoft (MSFT)

It is the same story for Microsoft.

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