Technical Talk: The stock market trend needs to be respected

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The comments below were provided by Kevin Lane of Fusion IQ.

•     S&P 500 holds last week near 1,275; this remains near-term support.

•     Pullbacks remain shallow, suggesting liquidity still fairly strong.

•     Long-awaited sideline dollars from individual investors driving move up.

•     US unemployment finally improving with first real tick down in months.

•     S&P 500 upside technical objective is 1,330.

•     Transportation Index hovering above support near 5,000, needs to hold.

•     We still expect 2011 to see a move to large caps out of small caps.

•     Hang Sang Index closing in on critical retest of uptrend line.

•     Bullish sentiment creeping up again.

•     Market seems to be setting up for speculative melt-up here.

The S&P 500 has moved above 1,300 and resistance and still resides within a bullish channel (green lines) – the upper end of that channel and the next resistance come into play near 1,380 (purple line). Though the bull-bear debate continues here, the trend needs to be respected.

The NASDAQis  still in bullish channel (orange lines) and like the S&P the trend needs to be respected. 2,675 is near-term support.

Transports have broken a converging trend channel (green lines) and are hovering above minor 920 (upper gold dotted line). Better support lies near 4,750 to 4,660 range (lower gold dotted line).

The Bank Index (BKX) continues to consolidate under resistance in the 55 (red line) and above support in the 52 region (green dotted line)

The Hang Sang Index turned down aggressively from 24,000 and appears on course for another test of its up-trend line (green line) − any violation of this would be BEARISH.

Source: Kevin Lane, Fusion IQ, February 7, 2011.

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