The Weekly Report for September 8th - September 12th, 2008

September 7, 2008- Market Summary
Last week, we mentioned that market participants have been trying to discern the future direction of the market indexes, with nearby resistance levels seemingly causing many traders to question whether bullish rallies will be able to sustain a longer-term move higher. As you can see from the charts below, all questions about the short-term direction were swiftly answered by the bears as they sent the markets back into bear market territory.

The chart of interest this week is of the Nasdaq because it dropped toward its July low near 1761. Traders will watch this level closely to see if it becomes an area of short-term support. From a technical perspective a move below this low would signal another wave of selling pressure. We've chosen to add the RSI to the bottom of the chart because it still has some room to move before it signals an oversold condition (below 30). You'll also notice that the 50-day moving average and 200-day moving average have started to show signs of divergence, which suggests that we will likely continue seeing an uptake in volatility.

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