Take a good look at that big red bearish engulfing candlestick on the Nasdaq (first chart below); it’s as ugly a candlestick as you’ll see. The index opened at the highs of the day and closed 59 points below that level. Quite a reversal. The only hope for the bulls here is whether it was cathartic or exhaustive enough to finally rid the market of sellers, and only time will tell if that was the case. The one negative sentiment indicator we’d note is that option traders started the day too complacent and barely improved by the close. The market remains hugely oversold here, but that has so far been of little help. On the Nasdaq, 1865-1870 and 1840 are critical support levels, and we’re going to have to start posting weekly charts if the index goes any lower than that. Resistance is 1880 and 1894-1900. As we noted last month, a correction of three weeks or longer has typically followed the first Fed rate hike; today marked the third week, so recent history has held. The S&P (second chart) has support 1087-1091 and 1075-1080, and resistance is 1095, 1100 and 1105-1107. The Dow (third chart) has support at 10,000-10,008, 9970, 9900 and 9850. Resistance is 10,062, 10,074, 10,093, 10,121-10,134, 10,162-10,175 and 10,210-10,220.
