Key Technical Levels to Watch in the Markets

Adam over at MarketClub is out with his latest technical analysis video on the stock market. In it, he takes a look at the extended market as this rally just continues to march on and take no prisoners. He immediately points out that the Dow Jones is trading around 11,144 and that the 61.8% fibonacci retracement is just up ahead at 11,241 and could potentially be a source of resistance for the market.

Looking at the S&P 500, the fibonacci retracement situation is nearly identical as the market is trading around 1,211 and the retracement sits just ahead at 1,226. Adam points out that this will be a very key area to watch. By no means is he recommending you short this market just yet as that's essentially a deathwish. Everyone that has tried that thus far has burned. However, it's always helpful to be cognizant of key levels to watch in the markets. Click the chart below to watch the video:



Those above fibonacci levels are something to keep an eye on and you should really only consider putting out shorts once the market starts showing signs of weakness first. In the mean time, it never hurts to lock in some profits, trim some positions, and raise cash levels. While hedge funds will almost always have short positions on, you have to remember that they've been burned by the majority of those positions as of late. This technical analysis is obviously more from a market timing perspective and you can view MarketClub's latest video analysis here.

Where's the S&P 500 Headed? Here's What Two Technical Indicators Say

Here's a current S&P 500 technical analysis video that takes a look at two technical indicators colliding in the chart of the S&P 500. While the market was clearly downtrending throughout 2008, it is undeniably in an uptrend from March of this year until present. However, if you draw a trendline connecting the sequential lower highs from late 2007 until now, you'll find that the market is approaching a resistance level as determined by this downtrending resistance line. You can watch the video here to see this illustrated.

Additionally, if you setup a fibonacci retracement tool from the last highs of October 2007 to the lows in March of this year, you'll see something very interesting. The 50% retracement ends up at S&P 1,122 and could very well also serve as resistance. So, you essentially have areas overhead to worry about. And, we're dangerously close to those areas already. Again, here's the S&P 500 video. And if you're unfamiliar with fibonacci retracements, watch this educational video.

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Nasdaq Bumps Into Resistance At Fibonacci Retracement

The guys over at MarketClub have done some more technical analysis on the Nasdaq chart and are looking closely at a possible shift in the Nasdaq here by using Fibonacci retracements. They believe that index is in a secular bear market and you can watch the Nasdaq video update here. Using Fibonacci retracements from the high in October of 2007 to the low in March of 2009, the retracement levels start to tell us something. Currently, we've encountered the 50% retracement which could potentially be a problem. The Nasdaq has already reversed after bumping into this level once so it looks like some solid resistance there. They also point out a slight divergence where the MACD turned down (negative) early while the Nasdaq continued higher. These divergences are typically early warning signs and are another reason to get cautious here. It's still too early to say whether this is a big reversal and start of a new trend, but things aren't necessarily looking rosy right now. Check out their analysis in their video update on Nasdaq fibonacci retracements.