The resiliency of the market was once again on display last week, by narrowly avoiding a meltdown one more time, as key support levels held up.  The action throws us right back into the trading range we’ve been accustomed to.  As traders/investors, the real money is to be made during decisive breakouts or breakdowns, so its certainly been a difficult year to make consistent money in either direction.  As the stalemate between bulls and bears continues and those support and resistance lines get squeezed comes an increasing likelihood of a major move in either direction.  With last weeks move comes hope of a fourth quarter breakout, but lets not forget where we came from.  There is work to do.  The market sustained significant technical damage just several days ago and will need time to repair.  Lets take a look at some key resistance levels the market will face in the coming days.

You see the Nasdaq holding at what has shaped up to be a very strong level of support at 2100.  Potential areas of resistance would include the downward trend line at the top (2165) as well as the 50 day moving average (2150).  If it can clear those two levels, all eyes will be on the area around 2,200 which it ran up against at the end of last year and at the beginning of August this year.  My feeling is we get one, maybe two more days max of buying here before hitting a wall and would be surprised if the market went anywhere ahead of the next Fed meeting.  Nothing wrong with light volume selling – just creates more bullish chart patterns.

The Dow held at support of its upward trend, but faces tough resistance towards a run at Dow 11,000.  As that upward trend line pushes the Dow closer to resistance levels (top of the triangle formation), the trading range becomes narrower, forcing the Dow to make a significant move one way or the other.  This action is generally bullish leading to a greater likelihood of a break out rather than a breakdown, but it looks like the market will need to meander sideways for some time before we know the outcome.

The S&P also managed to hold on to life support there last week and actually managed to close above the 50 day moving average.  Yes, its an impressive move considering where we were last week, but with end of the quarter activity, you have to be a bit skeptical.  By the end of next week, we should get a much more accurate view of the health of this market, at least in the short term.