The Weekly Report for August 18th - August 22nd, 2008

August 17, 2008- Market Summary
Recent buying pressure continued to dominate the direction of the major indexes, but as you can see from the charts below, the nearby resistance levels are causing many traders to question whether the bullish rally will be able to sustain itself. Charts of interest this week are of the Dow and Russell 2000 because they are in the process of testing major levels of resistance, which have prevented the indexes from heading higher in the past. From a technical perspective, it looks as though the bulls have their work cut out for them if they'd like to see the upward move continue.

Last week, we also mentioned that the Nasdaq broke out of a period of consolidation (shown by the converging trendlines). As you can see from the chart, the momentum that was sparked after the rally has been able to continue, but traders will now keep a close eye on the nearby resistance of the 1,995 level. It is important to note that the 50-day moving average remains below the 200-day moving average, so traders may want to wait on the sidelines in this market until confirmation of a longer-term reversal appears.

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