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[arthur]

There are often contradictions in technical analysis. The first chart shows SPX may be creating a bullish inverse head & shoulders pattern, because Nasdaq held up much better than the Dow Jones. The rising 50 day MA is bullish. Yet, SPX is below its 50 day MA.

The second chart shows the Dow Jones inverse head & shoulders no longer holds. So, the Dow may either create a double bottom or trade within the parallel downward channel.

The third chart, which is a monthly Dow chart, shows a bullish cup-and-handle pattern. Yet, the Dow closed below its 80 month MA, although the month is incomplete.

High oil prices are keeping the Dow lower than Nasdaq, since the Dow components create heavier products than Nasdaq. There is also uncertainty before the election, which takes place a week from Tue. Spain had a terrorist attack three days before its election. I expect a relief rally after the election, if there is no major terrorist attack.

End of the year tax selling, where institutions typically sell weaker stocks and keep stronger stocks, may also explain the recent sell-off.